EghtesadOnline: Iran is giving Russia another market to offload its massive wheat harvest.
The Persian Gulf nation has agreed to buy the grain from Russia and Kazakhstan, and total shipments may reach as much as 1 million tons a year over the next five years, Tehran Chamber of Commerce, Industries, Mines and Agriculture said.
The wheat can only be used to make flour for export and a ban imposed in 2016 on wheat imports for domestic consumption remains in place.
“There is unused capacity at Iran’s flour mills,” Kaveh Zargaran, chairman of the Agriculture Committee at the Iranian trade organization, said in an interview with Bloomberg in Moscow.
“Shipments may start at the end of next month, if Iran’s private millers can obtain loans to buy the grain.” Russia has been shipping out wheat at a record pace this season, as the world’s top exporter offloads its biggest ever harvest. Attractive prices for the grain have helped the country grab market share from places like the US and Europe, while Moscow has also been eying up new destinations such as Iran and Saudi Arabia, Financial Tribune reported.
Russian Energy Minister Alexander Novak, who oversees trade with Iran, said on Tuesday he expects sales to Iran to reach 1.5 million tons a year.
“Iran signed a memorandum of understanding with Russia and Kazakhstan on March 4, which laid out some details of the trade,” Zargaran said.
“The agreement leaves in place a ban on imports of wheat for domestic use, which is designed to support local farmers.”
Iran has een encouraging flour exports, with the government amending some market rules last year and targeting more sales to places like Iraq and Afghanistan.
“Turkey, the second-biggest buyer of Russian wheat, now dominates Iraq’s market,” Zargaran said.