Kazakhstan, Astana, May 15 / Trend , K.Konirova/
Director of NC Food Contract Corporation JSC Foreign Economic Activity Department Daulet Uvashev spoke with Trend in an exclusive interview.
Trend : What is the situation with the supply of Kazakh grain to Azerbaijan?
Daulet Uvashev: The Caucasus countries Azerbaijan and Georgia is the market for which we are always struggling. Our shipments to Azerbaijan make up 700,000-800,000 tons of grain per year. Moreover, there is the Baku grain terminal in Baku which belongs to us on a parity basis and a mill complex function there in summer. In other words, we will deliver not only grain, but also flour to this market.
Azerbaijan has imposed 18-percent VAT on the imported grain, respectively, the price rose a bit. And regarding that the VAT must be paid, the Azerbaijani companies buy wheat from us at a lower price than we have on the domestic market at the moment.
Q: And what is the price?
A: Roughly, it costs $125 dollars per ton on the elevator in Kazakhstan. This is the price offered by the Azerbaijani miller to safely sell the needed volume in the region. But it is profitable for us, because the price on Kazakh domestic market is $166 per ton at the moment.
At present, the Azerbaijani market operates through the supply of Russian wheat of Class 4 and small quantities of grain from Ukraine. But Azerbaijan is currently considering the possibility of the Kazakh wheat supply, as it is needed as a conditioner. The Russian grain yields to Kazakhstan on the quality. The percentage of gluten in the Kazakh grain is very high. And the percentage of gluten in the last year's harvest was higher - from 27 to 30 percent.
Q: What's the price of grain on the domestic market of Kazakhstan?
A: In May, there was a trend towards higher prices of Kazakh grain on the domestic market. Thus, it was $125 dollars per ton in March, but today the ordered grain is sold to its traders for $166 per ton. This increase has been forecast, because traditionally main importers from Central Asia - Uzbekistan, Tajikistan provides their grain reserves with high-quality wheat from Kazakhstan in May and June. It has been two years that Turkmenistan actively buys our wheat. In general, all the Central Asian countries, including Kyrgyzstan, purchase roughly 2million-2.5 million tons of the Kazakh grain per year.
Moreover, this year Iran has to import up to 8 million tons of wheat because of a low yield of wheat due to the drought last summer. Kazakhstan has becomes its main suppliers, as its high quality wheat fully meets the requirements of Iran. Afghanistan also has become one of our customers this year due to drought.
Yet, Kazakhstan's export opportunities make up 6-7 million tons of grain per year. As for May 10, the country exported only 4 million tons of wheat and flour in grain equivalent. So, the country's grain reserves are enough for sale.
Q: Why does one of the main importers - Azerbaijan prefer to buy the Russian grain at the moment?
A: This year, Azerbaijan has preferred to take the cheaper Russian wheat because of the price difference (Kazakh grain is more expensive than the Russian). In 2008, Russia and Ukraine have collected a record harvest. Russia - 108 million tons of grain, of which 63.5 million tons is wheat, Ukraine - 52.5 million ton compared to 26 million compared to 2007.
Because of the high harvest, grain prices in these countries began to fall, especially the Stavropol neighboring the Caucasus was preferable for Azerbaijan and for the price and logistics. The wheat of the Stavropol has also high percentage of gluten.
Under the global financial crisis, this year has shown that, despite the high quality of Kazakh wheat, consumers prefer not to look at quality and price. They took what was cheaper.
Q: What are forecasts for the grain price in the autumn?
A: It depends on many factors, primarily, on the nature's caprices and the grain market is very sensitive to this. According to some analysts, major grain producers will reduce production to almost 37 million ton. Thus, Russia intends to reduce its production by 5 million tons. At the same time, it should be regarded that that some countries have large stocks of grain.
Nevertheless, I want to say that over the past three weeks, the situation began to change and prices of grain on world markets went up.
The entire season on the [sales on terms] FOB, major reference point is prices for the U.S., French and Canadian wheat. Thus, the U.S. wheat price was $180 dollars per ton in the entire season, while now it has gone beyond the psychological bar at $ 200 and was $204 per ton. The French wheat also crossed over $ 200. The price of Russian wheat in the [conditions] FOB was $185-190 per ton in Novorossiysk.
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