Some 120,000 tonnes of hard red winter wheat grown in the Plains is on its way to the Islamic Republic, according to the U.S. Department of Agriculture. The sale of another 60,000 tonnes has been finalized, according to trade sources, and Iran may ultimately buy some 400,000 tonnes of U.S. wheat this year. The purchases are part of a massive effort by the Islamic Republic to build up its grain stockpiles amid growing difficulties in financing imports of everything from steel to palm oil. At the same time, Iranian companies are devising elaborate workarounds to find new markets for crude oil exports.
Exports of U.S. wheat to Iran are legal. U.S. and European sanctions against Iran exempt agricultural products. The major U.S. commodity traders - Bunge, Archer Daniels Midland and Cargill - won't comment on whether they were involved in the deals, but Cargill told CNN that it "does sell agricultural commodities to Iran as food is specifically excluded from the sanctions" implemented because of Iran's nuclear program. "We take great care to ensure that these sales respect both the spirit and the letter of the law while trying to make sure that ordinary people are not deprived of basic foodstuffs," a Cargill spokeswoman said.
According to USDA figures, 1,564,000 tonnes of U.S. wheat were exported to Iran in 2008, when the country was suffering a drought, and 312,000 tonnes the following year. Iran has also bought smaller amounts of U.S. soybeans and corn. Once again, analysts say dry weather is in part driving the sales. "Iran's appetite is driven by drought, a desire to build up grain inventories and hedging against the future impact of sanctions," says Shelley Goldberg, director of global resources and commodities strategy at Roubini Global Economics. "Inventories were getting quite low last year."
State-owned and private Iranian companies are devising ways to overcome the shortage of hard currency, using barter, gold and currencies such as the Indian rupee and Russian rouble. Traders say it also appears that Iran's Central Bank has stepped in, making foreign exchange available to facilitate imports. Iranian importers are also looking to Pakistan for several hundred thousand tonnes of rice and wheat this year as part of a complex barter deal. Pakistan has a wheat surplus. A spokesman at Pakistan's Ministry of Water & Power, Tanveer Alam, told CNN Monday that Pakistan was planning to export one million tonnes of wheat in exchange for iron ore and fertilizer.
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