Iran seals new deal to buy wheat, seeking more
London/Hamburg, August 6, 2014
Iran has bought 50,000 tonnes of Black Sea wheat, trade sources said on Wednesday, as the Islamic Republic tries to bolster stocks from global markets due to a lower-than-expected domestic harvest.
The cargoes were purchased by state buyer GTC for August shipment, with further seen in the pipeline.
"There is no doubt that GTC is looking for more and this purchase is part of it," a trade source said.
"Iran is taking advantage of current low prices to get some supply cover," a European trade source added.
Iran was never barred from buying food under sanctions imposed by the United States and the European Union over Tehran's nuclear activities.
But the measures have made trade more difficult for the past two years by hindering payments and ocean shipping, which has left the bulk of the work in the hands of state buyers such as the GTC and SLAL.
Trade sources say private grain companies in Iran have begun making regular enquiries for grains including corn and animal feed.
A lower than expected harvest has placed pressure on the country to import more.
Nevertheless, state buyers like GTC as well as other importers are facing payment issues.
Many banks are steering clear of financing any deals with Iran due to a series of fines handed out by U.S. authorities for dealing with sanctioned countries, including a recent $8.97 billion penalty for BNP Paribas of France.
In May, trade sources and Iranian officials said hundreds of thousands of tonnes of grain and sugar were stuck in transit due to payment problems.
Trade sources said last week at least 500,000 tonnes of wheat was held up due to payment problems. Iranian government officials confirmed there was a large backlog.
An Iranian commodities trade source said importers were struggling to absorb costs of using authorised accounts with oil revenues especially in China where they pay a 10 percent premium.
"The end user can't pay the money and cannot afford it and the bank will usually not want to do the trade and the central bank won't give it to them. So the question for the supplier is how will I make up that margin - that is where it gets derailed," the source said.
"It means that ships that do not have foreign exchange allocations allotted, which are sent to Iran, get diverted or they end up waiting inside in territorial waters and the arteries of trade get clogged." – Reuters