Iran seals first big wheat deal for 2014, buys about 400,000 tonnes
Iran has bought at least 400,000 tonnes of wheat in the first big state-sponsored purchase since Dec…Iran has bought at least 400,000 tonnes of wheat in the first big state-sponsored purchase since December, traders said on Friday, as relaxed Western sanctions make deals easier.
Iran was never barred from buying food under sanctions imposed over the country's disputed nuclear programme, but EU and U.S. financial measures made trade more difficult for the past two years by hindering payments and shipping.
A breakthrough agreement between world powers and Iran in November has temporarily eased sanctions on some sectors of Iran's economy, which is already coaxing more companies to seal lucrative contracts with the Islamic Republic.
European trade sources said on Friday Iran's state grains buyer GTC bought the cargoes to be sourced from Russia and the European Union, including Germany, for shipments between March and May.
One European wheat exporter put the total bought at around 600,000 tonnes.
"Iran is using its new financial freedom with sanctions being relaxed to build up wheat stocks in a reaction to weather problems in their region," one trader said.
"There seems to be growing nervousness in Iran that a drought in Turkey may damage Turkish crops which could encourage Iranian farmers to smuggle wheat into Turkey."
The last big purchase GTC made was in December for around 250,000 tonnes of Mexican wheat for pasta making and 180,000 tonnes of bread making wheat from the Black Sea after making other sizeable purchases earlier in 2013.
"While the payment process is still not as quick as other destinations not impeded by financial sanctions, Iran is becoming a big volume game which is an increasingly lucrative market. They will be expected to buy more," said a European commodities trade source active in Iran.
Iran was a leading customer for German wheat last season with just over 1 million tonnes bought. About 250,000 tonnes of German wheat was due to be shipped to Iran in January.