Kazakhstan plays a quota game, yet its export is mounting
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A few days ago, Kazakhstan’s Interdepartmental Commission on Foreign trade policy and participation in international economic organizations decided to extend the restrictions on wheat exports. It is expected to be confirmed by the end of June in the amount of 550 kmt of wheat & meslin to third and the Eurasian Economic Union countries, as well as 370 kmt of wheat & rye flour to third countries effective from July 1 to September 30. During the period, the allowable limit for exporting soft wheat on one exporter would be 50 kmt. According to the Grain Union, Kazakhstan, the quota for wheat is 50%, for flour – 87%. From March 15th until June 15th, a quota was introduced to export 1,000 kmt of Wheat and 300 kmt of flour.
In Q1 2022, Kazakhstan’s wheat & meslin export totaled 2,025 kmt, growing by 64% y-o-y. In terms of monetary volume, it is doubled, reaching USD592 million. The main markets are Uzbekistan (43%), Afghanistan (11%), and Tajikistan (9%). The share of Kazakh wheat in grain imports in these countries is about 90%. Iran is also a fast-growing market. Its imports grew almost 4 times in Q1. According to the latest AgFlow data, Kazakh wheat shipment bound to Iran rose by 28% in April-May, y-o-y. Further, Iran is to import 1,000 kmt of Grains from Kazakhstan in 2022-2023 under the agricultural products trade & transit agreement signed by the Agricultural Ministers.
by Mainbayar Badarch for AgFlow
Since the initial export restriction, the cost of wheat in the domestic market of Kazakhstan increased by 30,000 tenges, exceeding 170,000 tenge/mt. Durum wheat costs 188,400 tenges. The average cost of soft wheat from producers amounted to 123,700 tenge/mt. In the regional context, the highest price for soft wheat was recorded in the Kostanay region – 132,000 tenge/mt, followed by Akmola (130,000), North Kazakhstan (118,600), Pavlodar (114,700), and Western Kazakhstan (109,000).
In 2021, the gross harvest totaled 11.8 million tons. Most wheat was traditionally harvested in the north: the Akmola region: 3.4 million tons, followed by North Kazakhstan (2.8 million tons) and Kostanay (2.6 million tons). The yield in 2021 was 9.3 quintal per hectare. The highest rates were observed in East Kazakhstan (15.9 q/ha), Almaty (15.7 q/ha), and Pavlodar (11.8 q/ha). In the leading wheat-harvesting regions, the yield was lower: Akmola (8.7 q/ha), North Kazakhstan (11.5 q/ha), and Kostanay (7.2 q/ha).
From September 2021 through August 2022, Kazakhstan Grain Union projected domestic wheat consumption to be 5.9 kmt while export and import to be 5.1 kmt and 2.6 kmt, respectively. This year, the Union forecasts a 12.5-13 million tons harvest. It is the standard level to export almost half without harming local consumption. As of March 1, wheat stocks were 6 million tons, 3 million tons can be exported, and 1.6 million tons can be consumed domestically until the coming harvest season in September.
by Mainbayar Badarch for AgFlow
Kazakhstan is the 9th largest wheat exporter in the world, supplying grain & flour to more than 70 countries. As an effect of the Russia-Ukraine war, Kazakh cargo to Europe via Russia becomes less accessible in reality, facing troubles at the Russian ports at the Gulf of Finland and the Black sea because of rejection of transshipment ports such as Hamburg and Rotterdam.
Its landlocked geography hinders export routes to large remote markets, but the country has the potential to reach more Middle Eastern countries. To hold a leading export position, the country is likely to raise export sales to Iran, Turkey, and South Caucasus via the Caspian Sea route. But high logistics costs challenge this route also. Getting to the Poti port of Georgia from Kazakhstan costs USD120-150, half of the grain price, USD370-380 per kmt. To the direct south, Pakistan might be on the radar to diversify its supply routes.
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