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USDA GAIN: Oilseeds, Cotton, Sugar, Grain and Feed


16 August 2012

USDA GAIN: Turkey Grain and Feed Update July 2012USDA GAIN: Turkey Grain and Feed Update July 2012

Wheat and Barley production forecast is being revised downward. Corn and paddy rice production forecast has not changed. There is a shortage of wheat straw, wheat bran, feed wheat, barley and all forage crops.
USDA GAIN Report - Oilseeds, Cotton, Sugar, Grain and Feed

Executive Summary:

Wheat and Barley production forecast is being revised downward. Corn and Paddy rice production forecast has not changed. There is shortage of wheat straw, wheat bran, feed wheat, barley and all forage crops. There are concerns about Russian wheat exports to Turkey. Turkish importers believe that Russia will implement an export tax in September and an export ban in November. Seed company representatives forecasted corn production at 5.5 MMT in May, 2012, but due to unfavorable weather conditions high yield seed will not be able to produce the yields seen in MY 2011. Turkey completed Lentil harvest at the end of June, 2012. Total lentil production is forecasted at 400,000 MT. In some regions yields reached 2 MT/ha.

Wheat

Post revised wheat production forecast to 15.7 MMT. Central Anatolia was hit hard by long frozen days in the winter and dry weather conditions in the spring. Yield losses reached 70% in some regions where harvest was late - around the end of July, 2012. The overall yield loss in Central Anatolia was 40% in MY 2012. Quality was higher than long term and short term averages. Although the wheat has high protein content, there were some energy problems reported. Sunn pest damage was very limited. The only quality related problem was the high level of adventitious wild plants in the wheat harvest. Due to excessive rain in May, weed problems were common in wheat fields. According to field reports, Polatli region had 250 kg/da, Haymana region had 150 kg/da and Konya region had 180 kg/da yield in MY 2012. In Konya irrigated wheat had 400 kg/da, whereas it was 700 kg/da last year and 600 kg/da over the long term average.

Gaziantep had a good year in terms of yield and quality. In Sanliurfa region there was a 10 % yield loss and Sunn pest problems were more common than the previous year. Production was reduced in both milling and durum wheat. Central Anatolian Durum wheat was affected heavily by dry weather conditions in the spring. Durum wheat production is forecasted at 1.7 MMT in MY 2012. There is very little feed wheat available in wheat market where wheat millers were the major player. The wheat price started at 580 TL/MT and reached to 720 TL/MT. The average price was around 680 TL/MT for milling quality wheat.

TMO had 1.5 MMT of wheat stocks at the beginning of MY 2012 and procured 1.3 MMT in MY 2012. It is expected that TMO will procure 1.5 MMT of wheat in total in MY 2012. The inward process regime will be the most utilized tool for wheat imports. But due to wheat production problems Turkey will import 1.5 MMT of wheat from sources outside of the inward process regime; most likely by TMO. TMO announced the purchase price on June 18, 2012 but hasn’t announced sales prices so far.

There are concerns about Russian wheat exports to Turkey. Turkish importers believe that Russia will implement an export tax in September and an export ban in November. Russia is already storing exportable wheat in silos at the port and the price of this wheat is currently lower than Russian domestic wheat prices. There is strong demand from Turkish buyers but they are hesitant to buy due to price volatility.

The pace of wheat flour exports began to decline due to high prices and allegedly due to some direct wheat imports from Iraq wheat millers. Wheat flour exports have slowed to Indonesia and the African market, including exports to Libya. Although there are some wheat flour exports under U.N programs, Turkish millers are not enthusiastic about this avenue. The price of wheat is unpredictable and they do not have enough low quality wheat supplies to blend with their high quality harvested wheat. Turkey currently has demand for durum wheat imports which is largely being met by suppliers in Kazakhstan and Greece.

The price of Russian 13% protein wheat C&F is 308 USD/MT as of July 30, 2012. According to traders, Russia only has 6 MMT of exportable surplus in MY 2012. There will be demand of 11.5% wheat during January-February 2013. Energy problems in Turkish wheat could open opportunities for exports of high energy wheat from Germany, Lithuania and the United States. The value of inward processing certificates reached 70 USD/MT in May, 2012, but settled down to 45 USD/MT in July, 2012.

Traders, farmers and processors are agreed that there is at least a 3 MMT yield loss compared to MY 2011. Traders were very active in the wheat market and are now awaiting news of the TMO sales prices. TMO changed their policy in MY 2012 and they didn’t announce wheat sales prices when they announced TMO procurement prices. This will encourage traders to procure wheat from farmers directly. Traders believe that TMO sales prices will be around 730 TL/MT, and that they will profit from wheat sales procured from farmers at 650 TL/MT. The major profit margin at the wheat mill is wheat bran sales. The wheat bran price is 500 TL/MT on July 30, 2012, whereas the wheat flour price is 42 TL/50 kg bag.

Barley

The barley yield is worse than the wheat yield in MY 2012. Even though barley area increased in Central Anatolia, dry weather conditions in spring, and long duration of cold temperature in winter reduced barley production to 5.5 MMT. The barley price increased dramatically and reached to 600 TL/MT in July 2012, causing TMO to intervene in barley prices on July 29, 2012, opening 100,000 MT of barley stocks at 589 TL/MT.

Corn

Post did not change the corn forecast. Seed company representatives forecasted corn production at 5.5 MMT in May, 2012, but due to unfavorable weather conditions, high yield seed will not be able to produce the yields seen in MY 2011.

The corn harvest will begin at the end of August. Corn production is forecasted at 4.2 MMT. Farmers are very sensitive about price and they don’t have financial flexibility to store corn. The corn price is 580 TL/MT in the Adana region at the moment and is expected to increase to at least 650 TL/MT in September, 2012. Turkey has a shortage of every kind of feed material including wheat, barley, hay and forage crops. Corn is the only feed material available at the moment. There will be high competition among buyers as soon as harvest begins in the Cukurova region.

Turkey invested heavily in the dairy sector in the last three years. The high price of imported soybean and corn derivative products will lead dairy, beef and poultry sectors to compete for domestic corn. The price of milk is 800 TL/MT. The price of grass is 650 TL/MT and hay is 520 TL/MT on July 30, 2012.

Rice

Late planting and cool weather conditions in May and June, and hot weather conditions in July have been favorable for paddy rice development. Post did not change paddy rice production, which remains at 770,000 MT. The yield will be lower than in MY 2011. Better estimates will be available after August 15, 2012.

Lentil

The area for lentil production has been decreasing for a couple of years. The main reason for this decrease is the switch from lentil to cotton and corn due to the availability of irrigation from the GAP project. The main areas of lentil production are Sanliurfa, Gaziantep, Mardin and Diyarbakir.

Lentil harvest completed at the end of June, 2012. Total lentil production is forecasted at 400,000 MT. In some regions yields reached 2 MT/ha, but generally the yield was around 1.4 MT/ha. The lowest yield was recorded at 0.8 MT/ha in the western part of Diyarbakir where there was heavy rainfall in the spring.

August 2012

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