Russia is signing new wheat export contracts with Turkey without any price premiums after the resolution of a trade dispute between the two countries, analysts and traders said. Turkey, the second-largest buyer of Russian wheat after Egypt and the biggest buyer of its sunflower oil, had been in an agriculture trade dispute with Russia since mid-March when it imposed what Moscow regarded as prohibitively high import tariffs.
The dispute, which had brought Russia's grain supplies to Turkey to a virtual standstill, was resolved at the meeting of the presidents of the two countries - Tayyip Erdogan and Vladimir Putin - in early May when Moscow agreed to scrap some of its restrictions on Ankara. "There are no problems (with supplies to Turkey)," Sergey Balan, the head of Russia's National Association of Exporters of Agricultural Products, told Reuters. "Everything resumed its natural course."
According to Balan, traders have already fulfilled supplies of wheat, which were delayed by the trade limits. Russia boosted wheat exports to Turkey to 105,300 tonnes in May from 58,400 tonnes in April, SovEcon agriculture consultancy said in a note, citing customs data.
Since the start of this 2016/17 marketing year on July 1, Turkey bought 2.4 million tonnes of Russian wheat, or 9 percent of Russia's total wheat exports. The normalisation of the trade relations between Moscow and Ankara was also bolstered in late May when Putin lifted restrictions on hiring Turkish workers and on Turkish firms operating in Russia.
"It looks like everything has become normal," a Turkish wheat buyer, based in Russia, said. There is no price premium for the supplies to Turkey in the new contracts, he added. Dmitry Rylko, the head of IKAR agriculture consultancy, also confirmed this. Sunflower oil supplies to Turkey have also returned to normal and there are no signs of any problems, Mikhail Maltsev, the head of Russia's Oil and Fats Union, told Reuters.