Russia Grain Exports to Turkey Resume at Key Ports
November 26 2015 - 8:00PM
Dow Jones News
LONDON—Exports of grain are leaving Russia's Azov Sea for Turkey
again after suffering delays in the wake of Turkey's shooting-down
of a Russian warplane, but some traders remain nervy about striking
new deals, according to industry sources.
The continuation of shipments highlights the countries' mutual
dependence in international trade. Turkey vies with Egypt to be the
largest importer of Russian wheat, while Russia's boycott of some
EU products has left it reliant on imports of fruit and vegetables
from Turkey.
Gregory Souris, director of Actava Trading DMCC, a Dubai-based
brokerage, said Actava finalized customs documents on Thursday for
multiple ships waiting to take grain to Turkey from the port of
Yeysk on the Azov Sea. The vessels hadn't been granted papers
earlier this week, he said, adding that the holdups only applied to
ships bound for Turkey.
"It seems to be they are now clearing the vessels," he said.
Erol Yahya, Executive Director of Turkish milling group
Intermil-Un, said a 3,000 ton vessel carrying wheat for the company
left the Azov Sea Thursday after being delayed in the wake of the
destruction of the Russian jet on Tuesday.
Still, the situation remains uncertain with tensions between the
countries running high. "It's a mystery to us what's going to
happen," said Mr. Souris.
On Thursday, Russia's Agriculture Minister Alexander Tkachyov
ordered tighter controls on agricultural products from Turkey,
saying some Turkish products don't meet Russian standards.
A Kremlin spokesman said the agriculture ministry's move wasn't
an embargo. Russia's introduction of tougher inspections on
foodstuffs frequently coincides with heightened tensions with the
country affected.
Andrey Sizov, managing director of Russian agriculture
consultancy SovEcon, said some Russian trade houses have stopped
striking new deals with Turkish buyers, fearing an export ban.
"They are afraid the government will stop these deliveries. If
they can't deliver they will have to pay fines," he said.
Still, he said a formal ban is unlikely, given Russia's reliance
on Turkish imports. Turkey was the no. 1 destination for Russian
wheat, corn, sunflower oil, and sunflower meal in 2014-15,
accounting for exports worth around $1.5 billion dollars, according
to SovEcon's data.
Turkish millers prize Russian wheat because it is better quality
than other Black Sea producing countries, Mr. Yahya said. If it
were cut off from Russian supplies, Intermil, whose mill in Ankara
can handle around 1,200 metric tons of wheat a day, would have pay
$30 to $40 dollars more per ton for grain from Canada, Australia or
the U.S., he said.
He pointed out logistical factors that would hinder the two
countries if they sought alternative arrangements. The ports of the
Azov Sea, where most of Turkey's Russian wheat is handled, can only
load small vessels of 3,000 or 5,000 tons. As such, they are
well-suited to Turkey's importers, who prefer small shipments
because of the higher costs involved when the 60,000-ton vessels
used at larger ports encounter delivery problems, he said.
Write to Ed Ballard at ed.ballard@wsj.com
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(END) Dow Jones Newswires
November 26, 2015 19:45 ET (00:45 GMT)
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