Kazakhstan to buy 2 million tonnes of wheat from its farmers

Kazakhstan's state grain trader will buy 2 million tonnes of milling wheat from local farmers at 42,000 tenge ($126) per tonne, the government said on Tuesday, after a record crop in Russia put pressure on the market. Russia, Kazakhstan and Ukraine form the so-called Black Sea grain exporting region, one of the world's largest. They ship wheat in competition with the European Union, the United States and Australia to customers in the Middle East, Africa and Asia.
In this 2017/18 marketing season, which started on July 1, Kazakh grain was partially squeezed out of its traditional markets in Central Asia by Russia's huge crop. The Kazakh cabinet approved the plan at a meeting broadcast live on its website after a proposal by the agriculture ministry which has also called for tighter control on imports of Russian grain.
"There is a disparity in the domestic grain market," Kairat Aituganov, Kazakh First Deputy Agriculture Minister, told the meeting. Domestic prices are falling and are lower than global prices due to Russia's record crop, which creates additional supply of cheaper grain near the Kazakh border, and the lack of railway wagons for grain exports from Kazakhstan, he added.
Russia and Kazakhstan have a free trade border as part of an post-Soviet customs union. Kazakhstan cut its 2017/18 grain export target to 8 million tonnes in the middle of December from a previously expected 9 million tonnes due to stiffer competition from Russian grain in the Central Asian and Caspian markets.
Russia's own grain exports have hit a record pace after its record grain crop of 134 million tonnes in 2017, mainly due to supply to its Black and Azov Sea ports from its southern and central regions. In the Siberian and Urals regions of Russia, which share the border with Kazakhstan, wheat prices are currently at around the same level as the one that the Kazakh government will offer to its farmers.
Excluding delivery costs, domestic prices for third-class wheat were at around $120 per tonne in Siberia and at around $132 a tonne in the Urals at the end of last week.