Kazakhstan Risks Losing Part of Its Traditional Grain Markets

The situation on the global grain market is becoming increasingly complicated due to restrictions affecting the operation of Russian and Ukrainian ports. The resulting problems could also have a significant impact on Kazakhstan, as substantial volumes of Russian grain are beginning to seek alternative sales destinations. Yevgeny Karabanov, Head of the Analytics Committee of the Grain Union of Kazakhstan, spoke about the situation in an interview with the TENGE TALKS channel.

According to him, more than 80% of Russian grain exports were shipped through ports in the Azov-Black Sea basin. The Sea of Azov has remained completely closed for more than a month, while two of the three grain terminals in Novorossiysk were damaged following an attack. Their combined capacity exceeds 15 million tonnes per year.

Restrictions on export logistics have led to a significant decline in Russian grain prices. According to the expert, Class 4 wheat from farms in the Rostov Region is being offered at around 6,000 rubles, or 31,500 tenge per tonne, and continues to fall in price.

For comparison, Class 4 wheat in Kazakhstan currently costs around 85,000–90,000 tenge per tonne. The average production cost of one tonne of wheat in the country is estimated at 70,000–80,000 tenge excluding VAT.

At the same time, since July 27, Kazakhstan has had a ban on wheat imports by road and water transport regardless of the country of origin. Imports by rail are permitted only for domestic processing enterprises and poultry farms.

According to Yevgeny Karabanov, significant volumes of Russian grain that cannot be exported via traditional logistics routes are seeking sales opportunities not only in Kazakhstan but also in Central Asian markets.

These include Uzbekistan, Tajikistan, Kyrgyzstan and Turkmenistan, as well as Afghanistan. These countries have traditionally been important destinations for exports of Kazakh wheat and flour.

The growing supply of cheaper Russian grain and flour to these markets could increase competition for Kazakh suppliers. If buyers shift toward Russian products, demand for grain from Kazakhstan could decline.

The representative of the Grain Union of Kazakhstan described the current situation as developing according to the worst-case scenario. Among the main factors, he cited damage to port infrastructure and the blocking of both Russian and Ukrainian grain exports through the Black Sea.

Additional pressure on the market could emerge once the large-scale harvesting campaign begins in other grain-producing regions of Russia. Currently, the main supplies are coming from the south of the country, the Volga Region, Orenburg Region, Tatarstan and Bashkortostan.

At the same time, large-scale harvesting has not yet begun in the Urals, Altai and Siberia. Once grain from these regions enters the market, supply volumes could increase further.

According to Yevgeny Karabanov, the current situation creates serious risks for Kazakh farmers and may require unconventional measures from the country’s government.