Turkey's wheat imports could face further obstruction on import system change

Turkey's wheat imports could face another obstruction, as the country's government has announced it is amending its import policy from June 25, according to a document seen by Agricensus on Thursday.

The document suggests Turkish authorities have confirmed earlier suggestions about an amendment to the wheat import system, which is designed to protect the balance sheets of the domestic wheat market and currently stipulates that millers have to export flour first to be able to get a license to import wheat further.

From June 25, wheat imports will be prohibited for any companies with old import licenses except those that have import declarations registered before June 25.

Penalties could also be imposed if any of the special conditions regarding exports are violated.

The companies that have not received new licenses will be forced to pay a 130% import duty.

In addition, the Central Bank of Turkey raised the policy rate from 8.5% to 15%.

Despite the fact that the increase was almost double the current requirement times, it has turned out to be significantly less than previous expectations that had feared it could be hiked to around 20%, but the move is already negatively affecting the exchange rate for the lira on international currency markets.

"The lira is weaker after the elections, the euro and US dollar exchange started increasing, prices of [imported] goods increased, and this increase is not going to be compensated by a 15% increase on the interest rate," one trader told Agricensus.

The moves is expected to slow trading activity and could be compounded further as the upcoming Eid holiday further slows down market activity.