Kazakhstan risks losing EU grain market due to Russian transit restrictions
Kazakh grain exporters face potential loss of EU market access as Russian rail restrictions disrupt Baltic transit, while alternative routes cost twice as much. Barley competitiveness in Iran is also weakening as freight rates rise to $95/tonne, Russian competition intensifies and a stronger tenge raises export challenges.
Kazakh grain exporters risk losing access to the European market due to restrictions on rail transit through Russia. In October, Russian Railways (RZD) rejected applications to transport Kazakh cargo to Estonia, citing insufficient rail capacity. This was reported by Zeynolla Abdumanapov, Head of the National Association of Grain Exporters KazGrain. According to him, there is no official transit ban, but Kazakh shipments have long been given lower priority, while Russia additionally raised transit tariffs towards the Baltic and Finnish border crossings in June.
The problem has intensified as Russian grain exports have been redirected from the Black Sea to the Baltic, Far East and Caspian routes. Following Estonia’s ban on Russian grain transit, Kazakh companies hoped to use available capacity at the ports of Muuga and Sillamäe but encountered restrictions imposed by RZD. Kazakhstan has traditionally exported durum wheat and linseed to the EU through Baltic ports. This season, exporters also planned to increase shipments of high-protein wheat, supplies of which have grown due to the characteristics of the harvest.
The alternative Trans-Caspian route through Azerbaijan and Georgia cannot yet fully replace transit through Russia. According to KazGrain, handling capacity at Georgia’s Poti port is limited, while overall logistics costs are approximately twice as high. As a result, this route remains economically viable mainly for higher-value commodities, particularly linseed and high-protein wheat. Kazakhstan’s railway operator is negotiating with RZD to restore shipments, but exporters fear that only limited transit quotas may be secured.
Meanwhile, Kazakhstan is losing ground in Iran’s barley market due to competition from cheaper Russian grain and sharply rising Caspian freight costs. According to Abdumanapov, freight rates on the Aktau–Iran route have surged from $17 to $95/t, while the tenge’s appreciation of around 20% over the past year has further weakened the competitiveness of Kazakh products. Despite growing Iranian demand, Russian exporters are capturing a significant share of shipments. At the same time, Kazakh ports are already offering their facilities for handling Russian grain, raising the risk that Kazakhstan could shift from being an exporter to serving mainly as a transit hub.
KazGrain expects the 2026/27 season to be more challenging than the previous one due to a smaller harvest, a strong tenge, logistics restrictions and intensifying Russian competition. China, Uzbekistan, Tajikistan and Afghanistan remain the main alternative markets, while exports to the EU will increasingly depend on transit agreements with Russia. In the longer term, the association considers the development of domestic grain processing essential to reducing dependence on transit routes and increasing exports of higher-value products.
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Source : UkrAgroConsult
