Iran starts build of food stocks despite sanctions
Tehran, March 30, 2013
Iran has started building grain stocks again, with purchases of wheat from Australia and Germany plus maize from Ukraine, said traders, with Tehran getting around payment difficulties caused by toughened international sanctions.
European dealers said the state grain buyer GTC had bought 120,000 tonnes of milling wheat, with some 60,000 tonnes due for shipment from Australia and 60,000 tonnes from Germany, both between April 20 to May 20.
"Iran is using a number of strategies to secure wheat supplies including deals brokered by Lebanese middlemen as well as directly from trade houses as they have to keep up their buying," a Middle East based trade source said
Ukraine has also resumed exports of maize (corn) to Iran with a shipment of 30,000 tonnes made on March 13, analysts and traders said on Thursday.
The sales were in addition to recently reported purchases by Iran of 55,000 tonnes from Germany and 180,000 tonnes from Australia.
The European Union and the US imposed toughened sanctions meant to discourage Tehran's disputed nuclear programme, which they say has a military purpose. Iran rejects these allegations and says its atomic work is peaceful.
Western sanctions do not target food shipments, but financial measures have frozen Iranian firms out of much of the global banking system, complicating payments for imports on which Iran relies for much of its food.
"Grains purchases by Iran are continuing at a steady rate and payment is difficult but possible," one European trader said. "There also seems to be some concern about Iran's new grain crop this year, with dry weather noted in non-irrigated areas which could cut yields."
Another trader added that payment issues appeared to have been smoothed out, highlighting the latest deals concluded.
"It seems like this latest trade could even have been done in euros," the trader said, although the source said it was not clear whether Iran drawn down on existing euro reserves.
While food cargoes are permitted, many international ship owners have become more wary about leasing vessels for trips to Iran given the complex banking regulations and fears over dealing with embargoed counterparties.
The Middle East source said with weak conditions in the shipping market, owners with older vessels, which burn more fuel and are consequently less competitive for cargoes in the wider freight market, were likely to provide transportation.
"Given this high premium trade, there will be owners in Australia and places like Greece who will do such trade as it employs their older ships, which are finding it tougher to compete with the modern fleet," the source said.-Reuters
Earlier this month Archer Daniels Midland Co, one of the world's biggest grain traders, said it unwittingly used a vessel controlled by a sanctioned Iranian shipping firm last year to transport grain in what was an effort by Tehran to hide the ship's ownership.
Iran has also made large recent purchases of soyoil from Argentina and of soymeal from Argentina and India.
"Soyoil purchases from Argentina by Iran have been brisk lately with some big trading houses involved in deals," another trader said.-Reuters