January 8, 2013
By the end of January or early February, Pakistani grain exporter Seatrade Group will start shipping 100,000 tonnes of wheat to Iran, one-tenth of the original tender agreed in August.
Iranian wheat imports are usually handled by the private sector but the Iranian government had to step in and help with purchasing this year because of the disruption to trade financing caused by Western sanctions aimed at Iran's disputed nuclear programme.
The grain is to come from Pakistani government stocks held by the government-run Pakistan Agricultural Storage and Services Corporation (PASSCO).
"It seems the (Iranian) government does not have the money" for the million tonne shipment, a director at the leading Pakistani grain exporter Seatrade Group.
"The tender was initially for one million tonnes but the contract is only for 100,000. They (PASSCO) said only 100,000 had been approved because of the financing factor."
"We were supposed to give wheat and take iron ore for Pakistan's steel mills and fertiliser in return," he said. "The other 900,000 tonnes is still under discussion and might be done on the private market."
The director said Pakistani millers had also been worried that the price of flour will go up, a politically sensitive issue in the country where 90% of its population consume it. Prices have increased twice in the past two weeks.
"The flour mills are worried that export at lower prices will result in them not getting sufficient wheat in January-March," Muhammad Najib Balagamwalla, the Seatrade Group chairman, said in an email.