Iranian buyers have defaulted on payments for about 200,000 tons of Indian rice.
Reuters quoted Indian exporters and rice millers as confirming the default Tuesday.
The default prompted the head of the All India Rice Exporters’ Association to call on members to stop rice exports to Iran based on credit, and to sell to Iran only for cash.
Vijay Setia, the association’s president, said Thai, Vietnamese and Pakistani rice marketers had already shifted to cash-only sales to Iran.
“It is a serious issue and we do not rule out further payment defaults by Iran,” Setia said.
Indian sources told Reuters the Iranian buyers had defaulted on payments of about $144 million for rice shipments under long-term supply deals. The cargoes were shipped from Indian ports in October and November. Most Indian rice exporters allow 90 days credit.
In other supply disruptions, five shiploads of grain to Iran were diverted to new destinations because payments did not come through, ship tracking data showed last week. Ten other ships are sitting off Iran awaiting payments before they will dock. Those shipments all involve animal fodder, not grain for human consumption.
Ukrainian and European traders said they were no longer booking Ukrainian grain shipments to Iran because of the payment difficulties.
Part of the problem stems from US and EU banking restrictions. Iran is finding it increasingly difficult to repatriate the hard currency from its crude oil exports that it needs to pay for imports.
But the sharp drop in the value of the rial is also adding to Iran’s import costs and making some deals unprofitable for Iranian importers.
India is Iran’s top rice supplier, accounting for some 70 percent of its annual requirement of more than 1 million tons of the grain, mainly Basmati.
Indian rice exporters have been using a loose, unofficial route involving a network of middlemen based in Dubai. The middlemen receive payments from Iranian importers in rials and pay Indian exporters in US dollars. That should get around the US banking restrictions.
But Indian traders said the defaults started after the rial plunged over the past month, making previous purchases costlier for Iranian importers. The cost of transactions also went up for the Dubai middlemen as they use US dollars to pay Indian exporters.