The Prodcorporation Factor and the “Iranian Trail”: Why Grain Prices Are Rising

Last week, Kazakhstan’s domestic grain market showed strengthening price levels amid subdued trading activity. The key drivers behind the upward movement were the launch of direct procurement by JSC National Company “Prodcorporation” and pre-holiday demand from exporters facing limited supply.

The announcement of the start of direct wheat purchases by Prodcorporation (effective from December 19) became a strong signal for the market, reinforcing price benchmarks and boosting expectations among agricultural producers. This triggered an upward price correction across most grain categories.

According to the Grain Union, prices for 3rd and 4th grade wheat, as well as wheat with 23–26% gluten, increased on average by KZT 1,000 per tonne. Prices for 5th grade wheat rose more significantly, by KZT 2,000 per tonne. The only exception was high-protein 3rd grade wheat (27% gluten), where prices declined by KZT 2,000 per tonne.

The current market situation is as follows:

4th grade wheat: supply is offered in the range of KZT 82,000–83,000 per tonne, while buyer demand is closer to KZT 80,000 per tonne (EXW).

3rd grade wheat: trading around KZT 80,000 per tonne (VAT excluded).

5th grade wheat: prices stabilized within the corridor of KZT 72,000–75,000 per tonne (EXW).

Shipment conditions began to improve after restrictions were lifted on the Saryagash checkpoint and additional transportation plans were approved by Kazakhstan Temir Zholy. Exports of grain and processed products picked up, although growth remains constrained by a chronic shortage of railcars and difficulties in their timely delivery to elevators. Restrictions on the Chinese direction (Dostyk and Altynkol checkpoints) remain in place.

Earlier logistical barriers created deferred demand and local supply shortages among importers in Central Asia, which are now pushing export prices upward:

Export prices for 3rd and 5th grade wheat increased by $1–2;

4th grade wheat gained $3.

The most dynamic segment of the week was the barley market, which experienced a sharp price surge:

At the DAP Saryagash basis, quotations jumped by $17;

At the Chinese border crossings (DAP Dostyk/Altynkol), prices rose by $8.

Analysts attribute the spike primarily to increased activity from Iranian buyers. A decline in freight rates from the port of Aktau a week earlier made the Iranian route more attractive, diverting volumes from other markets and triggering a general price increase. Domestic barley prices followed export trends, rising by KZT 1,000 per tonne.

The flax market remains stable, with signs of slight correction on external markets:

Domestic market: prices unchanged (EXW ~$410–420).

Exports: FCA Kazakhstan quotations declined by $5 to $490–495. A similar decrease was recorded on the European route (DAP Poland), down €5.

China: prices remain flat, with flax in Chinese ports holding at 3,800–3,900 yuan per tonne ($542–556).

Exporters could have received additional support in dollar terms from a weaker national currency; however, last week the tenge strengthened by 2.5% against the US dollar, weakening only against the Russian ruble.

The market is entering the new year with an upward trend. Logistical bottlenecks from previous months have created supply shortages among buyers in Central Asia, which are now translating into higher prices. At the same time, Iranian demand for barley and state wheat procurement programs are providing solid support to domestic prices despite the strengthening of the national currency.