Tenge Strengthens, Grain Market Sees Price Imbalance, Analysts Say

The situation in the grain market remains unstable, according to Evgeny Karabanov, head of the analytics committee at the Grain Union of Kazakhstan, Orda.kz reports, citing apk-news.kz.

According to the union’s analysis, the main sources of uncertainty are the upcoming changes in tax rules and the strengthening of the national currency.

From March 30 to April 5, the Grain Union of Kazakhstan recorded no significant changes in prices for the main grain crops. At the same time, several factors continued to put pressure on the market.

Karabanov said the main reasons for the instability are the requirements of the new Tax Code, especially regarding VAT refunds for agricultural exporters, as well as the sharp strengthening of the tenge against foreign currencies.

Export prices for wheat and barley remained almost unchanged during the reporting period. At the same time, under FOB Aktau terms, market participants began signing new contracts at price levels seen in early March.

After the shock linked to the new Tax Code changes, the market is now facing another strike — a significant strengthening of the tenge against all currencies. Against this background, the disparity between domestic and export prices has reduced exporter activity. At the same time, low margins are holding back price growth for grain and oilseeds on the domestic market. Deals for the sale of Kazakh barley to Iran have started to be concluded again. Price parity is at the level of early March. the expert said. 

Analysts say the current situation creates additional risks for exporters and could affect the future pace of external shipments.

Original author: Daria Malkova

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