March 6, 2012

European traders said on Monday (Mar 5) that the Government Trading Corporation of Iran (GTC) is in talks about buying several hundred thousand tonnes of Russian and Indian wheat.

"I think we could see some large new deals agreed this week," one trader said. "It is hard to assess the quantities but hundreds of thousands of tonnes could be involved."

On March 1 the USDA revealed that Iran had made a rare purchase of 120,000 tonnes of US wheat in an effort to build food stockpiles as the US and Europe implement tough new sanctions to contain Tehran's disputed nuclear programme.

In the last month, Iran has bought or tried to buy nearly three million tonnes of wheat on fears the sanctions will disrupt imports and cause bread shortages. Iran has asked to import a million tonnes of wheat from Pakistan in a barter deal and also approached India.

Iran has also bought nearly two million tonnes of wheat in February from Russia, Germany, Canada, Brazil and Australia.

"Russian banks seem to be ready to finance some of the deals and some payments could be made in roubles or even in the Indonesian currency," another trader said. "Some talks involve payment for wheat with steel, there is also talk about crude oil being bartered."

Traders said that wheat from Kazakhstan could also be purchased, although the main focus appeared to be on Russia and India this week. Several European traders also said they believed Iran may have bought more US wheat than the 120,000 tonnes announced on March 1, but details were unclear.

"I think we are going to see announcements that more US hard red winter has been sold but this appears to have already traded," another dealer said.