HAMBURG/LONDON: Iran’s state grains buyer GTC swept back into international markets, picking up more than half a million tonnes of wheat to shore up domestic stocks as its crop expectations were pared back and to avoid unrest after next week’s elections.
The purchases included a premium due to sanctions hindering Iran’s payments for imports, although money is readily available for food from plentiful oil revenues.
Dealers said Iran had bought about 600,000 tonnes of milling wheat from the Baltic Sea region and Germany in the last two weeks, including around 200,000 tonnes purchased on Monday.
“I think that we will see more wheat purchases from Iran in coming months because of the uncertain crop outlook there,” one European trader said.
Shipment for the 12.5 percent protein wheat was July, August and September, traders said.
The European Union and the United States have imposed sanctions aimed at discouraging Tehran’s nuclear programme. Iran insists that its atomic programme is for peaceful purposes.
The sanctions do not target food or animal feed shipments, but financial measures have frozen Iranian companies out of much of the global banking system, hindering payments for imports.
Traders are able to continue food deliveries to Iran using non-dollar payments.
Iran has oil revenues amounting to billions of dollars in local currencies frozen in bank accounts in countries such as Turkey and India, which trade sources said were likely to have been tapped for the latest sales.
“Iran can use the locked-up funds in bank accounts in one country to buy humanitarian goods including food from any other country,” said Mark Dubowitz, who has advised President Barack Obama’s administration and US lawmakers on sanctions.
“And those humanitarian goods can be purchased directly and shipped to Iran without having to pass through the country where the bank account is located.”
Dealers said Iran also likely used foreign middle-men for some of the purchases to broker deals and arrange financing. “The purchases are being driven by the elections in Iran and those in power there want to ensure there are sufficient stocks of commodities,” a trade source said. “It is also sending a message to Iranians that they will meet the food needs of their people whatever it costs.”
The source said Iran had paid for the cargoes in multiple currencies for an estimated equivalent price of $350 per tonne, or $210m. By contrast, Jordan bought wheat on international markets earlier yesterday, paying $297.50 a tonne.
Germany has been one of Iran’s top suppliers, exporting 1.087 million tonnes of wheat between July 2012 and the end of March 2013.
Reuters
