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TMO: No price reductions on grain sales agenda

16 February 20245 min reading

TMO General Manager Ahmet Güldal, speaking at the TFIF congress held in Antalya, provided clear statements regarding TMO's grain sales policy, stating, "We have no plans to reduce prices or engage in sales below cost in the current season. There will be no Inward Processing Regime (DIR) sales and no forward sales."

The 18th International Congress and Exhibition of the Turkish Flour Industrialists' Federation (TFIF), themed "Global Agricultural Policies, Food, and Energy", commenced in Antalya with a record-breaking participation from the sector. During the opening session of the congress, Ahmet Güldal, Chairman of the Board of Directors and General Manager of the Turkish Grain Board (TMO), provided significant assessments and observations on grain production and trade globally and in Turkey. Güldal highlighted that global wheat production, which stood at 630 million tons annually in 2004, has surged by 160-170 million tons over the last two decades. He noted that the all-time record was achieved in 2022 with a yield of 804 million tons, while last year witnessed a 2 percent decrease in production, totaling 788 million tons. Güldal emphasized the reduction in closing stocks this season to 266 million tons, marking the lowest level in the past four seasons. 

A YEAR OF RECORDS IN GRAIN PRODUCTION

Güldal stated that Turkey experienced a bountiful year in grain production in 2023, announcing a wheat yield of 22 million tons. He shared that the production of bread wheat reached 17.7 million tons, marking the highest figure in the last 8 years, while durum wheat production of 4.3 million tons was the highest in the past 18 years. Güldal elaborated on achieving a record barley yield of 9.2 million tons, the highest in the last 17 years, and an all-time record in corn with 9 million tons. He highlighted that during this abundant season, TMO set a new record in this sector with purchases exceeding 13 million tons.

OVER 16 MILLION TONS OF STORAGE CAPACITY

TMO General Manager Güldal emphasized that despite the intense purchases, TMO possesses the storage capacity necessary to securely preserve this crucial stock. "The TMO warehouses, along with licensed and rented storage facilities, amount to 16.5 million tons," he stated. Güldal then outlined the rigorous measures taken to ensure the healthy preservation of products within the storage areas.

GRAIN MARKETS OUTLOOK FOR 2024

Ahmet Güldal also provided insights into the forecast for global and Turkish wheat for the upcoming season. He mentioned that in Russia, the world's leading wheat exporter, favorable conditions prevail with good soil moisture and rains, while in Ukraine, another significant producer, adequate snow cover and increasing soil moisture were noted, although cold weather in certain areas may pose risks to crop development. Güldal highlighted a decrease in wheat acreage in the US compared to last year, and in the European Union, adverse weather conditions such as cold temperatures in the north, excessive rainfall in central regions, and drought in the Mediterranean were observed. Particularly in France, he noted delays in durum wheat plantings due to unfavorable weather conditions, along with a decrease in planting areas. Based on the latest data, it is projected that global wheat production for the new season will increase by 11 million tons compared to last year, reaching 799 million tons. He emphasized that closing stocks for the 2024/25 season are estimated at 260 million tons, marking the lowest level in the past 6 years.

Ahmet Güldal noted that in Turkey, January precipitation increased by 25% compared to seasonal norms and by over 100% compared to January last year. "There has been an increase of more than 49-100% in all regions compared to last year. We expect wheat production in 2024 to be on par with that of 2023," he said.

RISK FACTORS FOR GRAIN MARKETS

Commenting on the risk factors for grain markets, Güldal listed them as follows:

  • Decline in cultivation areas and carryover stocks globally
  • The ongoing Russia-Ukraine war
  • Attacks on ships in the Red Sea

The TMO General Manager emphasized the climatic risks for Turkey, stating, "Despite the anticipated increase in wheat cultivation areas within the country, it's crucial to be mindful of the risk of yield loss in case of excessive precipitation during March-April. Excessive rainfall could lead to ailments such as root rot and rust, consequently weakening plant development. Additionally, elevated air temperatures beyond seasonal norms might result in severe and irreversible damage to the crop, such as rodent infestation. Rapid plant development due to the hot weather may lead to vernalization, and if winter conditions occur in the near future, there's a possibility of cold damage."

RECORD FLOUR EXPORTS

Güldal remarked that Turkey achieved a record-breaking wheat flour export of 3.7 million tons in 2023, stating, "To harness our country's export potential in surplus products and mitigate domestic price pressures against our producers, we've expanded exports of corn and durum wheat as raw materials." In line with this, he reported Turkey's export of 1.4 million tons of durum wheat and 2.3 million tons of corn.

At the conclusion of his address, Ahmet Güldal addressed the questions eagerly anticipated by flour industrialists. Clarifying that there should be no expectation of discounts in TMO's grain sales, he stated, "We do not have any plans for price reductions or selling below cost in the current season. There are no regulations in place. There will be no sales from stocks in inventory under the Inward Processing Regime (DIR).or forward sales. We closely monitor market stocks, with a significant portion of the country's stocks managed within our organization."


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