Iran has had a poor wheat crop this year, so large purchases were to be expected. But the very quiet purchasing methods are unusual and may reflect an effort to duck under financial restrictions.
Iran’s Government Trading Corporation (GTC) continued its discreet method of contacting traders directly for offers rather than issuing purchasing tenders, making it difficult to glean details of total purchases.
“They are buying without tenders almost every week, I think they’re buying a lot of EU wheat,” said a European trader.
In recent days, GTC has discreetly bought at least 400,000 metric tons of milling wheat, largely from the European Union, Baltic Sea and Black Sea regions, European traders told Reuters last week. Some traders thought up to 500,000 metric tons could be involved.
Iranian wheat imports are usually handled by the private sector but the state had to step in and help with purchasing earlier this year because of the disruption to trade financing caused by Western sanctions.
Sanctions do not target food shipments, but they make it difficult for importers to obtain letters of credit or conduct international transfers of funds through banks.
Iran is still involved in talks about major barter deals for wheat with India and Pakistan, but those talks have been stalled for weeks and do not look like going anywhere.
On August 9, Pakistan agreed on a price for 1 million metric tons of wheat it is ready to export to Iran in a barter for Iranian fertilizer and iron ore. India has said it is ready to export up to 3 million metric tons of wheat to Iran and is continuing talks.
However, traders were skeptical that the deals would be concluded due to Iran’s zero tolerance for karnal bunt, a grain fungal disease present in both Pakistani and Indian wheat.
After buying aggressively in March and April, Iran’s purchases slowed as its local crop was harvested. However, the GTC has been back in the market in recent weeks, making major wheat purchases earlier this month.