Turkey is looking for alternatives to Russian grain after the dispute between Moscow and Ankara over the shooting down of a Russian warplane placed a question mark over future deliveries and put new deals on hold, traders and analysts said. Russia has not so far interfered with grain exports to Turkey, the largest buyer of Russian wheat, and vessels are departing Russian ports as normal apart from a few minor difficulties at some terminals.
But traders in both countries fear that either Russia will restrict grain exports to Turkey or Ankara will limit deals with Moscow as the row over the downing of the SU-24 fighter bomber near the Syria-Turkey border on November 24 escalates. Russia has already banned some Turkish food imports and Ankara is weighing a response.
"Turkish buyers remain worried about buying Russian commodities as no one knows what will happen and the fact is that Russia is still defiant and increasing tensions," one trader in Turkey said. "I'm still worried that Turkey could impose sanctions on Russian goods in response." Traders say they are honouring previously agreed supply deals but are not signing new contracts for now, except for a few deals for near-term shipment. Some traders say they have begun working on a plan B for next year. "We are not buying anything now as we want to understand what will happen," said one consultant for Turkey's grain purchases in Russia, who declined to be named.
UKRAINE OPTION
Several traders said Ukraine, one of Russia's main rivals on the world grain market, is the best alternative wheat supplier but its prices for the same quality are higher. One trader said Turkey was also looking to buy wheat from the European Union. Kiev has made clear it would welcome a boost in trade with Turkey, and Prime Minister Arseny Yatseniuk told a government meeting on Wednesday the agriculture ministry had already held talks with Turkish partners.
"We as Ukraine clearly declare - in case Russia imposes a ban on deliveries of grain and (sunflower) oils from Russia to Turkey - that we will provide food security to Turkey," he said. Regardless of the political situation, Russian grain exports to Turkey will decline in the coming months due to seasonal factors, said Igor Pavensky, deputy head of rail infrastructure operator Rusagrotrans.
Russia's grain exports via the shallow ports of the Azov Sea usually fall in January and February due to cold weather, and about two-thirds of annual grain exports to Turkey are usually shipped from July-December, he added. According to his estimate, Russia's grain supplies to Turkey for July-December will reach 2.5 million tonnes, of which 500,000 tonnes are due to be supplied this month.