EghtesadOnline: Iran needs to import 3.5 million tons of wheat by May 21 and a letter of credit (LC) has been issued to this end, according to the head of Federation for Iranian Food Industries Associations.
“Russia and Ukraine have been traditional suppliers of the staple grain as well as corn and oilseeds to Iran for years. Other countries, too, buy part of their demand for wheat from the two countries now engaged in war. We import wheat from Germany, Australia, Canada and Argentina as well,” Mohammad Reza Mortazavi was also quoted as saying by ILNA.
Noting that every year up until May, prices of agricultural products rise, the official said this year the conflict between Ukraine and Russia has also impacted global prices, adding that over the past six months, wheat has seen the highest price rise in the past five years.
“The war has also made other nations think about purchasing agricultural products and food, and store the commodities to ensure supply to their local markets. Whenever Egypt and China in particular start to fill up their reserves, the international market goes through another price hike. We hope that with the beginning of the harvest season, prices will come down,” he said.
Mortazavi said even if precipitation levels are high enough over the first month of the upcoming Iranian year (March 21-April 20), which is when crops start to grow, the country will still need to import 15 to 16 million tons of essential goods.
Also known as necessity or basic goods, essential goods are products consumers will buy, regardless of changes in income levels.
“We, like other states, need to import goods to fill up our strategic reserves, but I believe the best time to make purchases for this purpose are the four months after May that is June, July, August and September when harvest takes place and prices are moderate. Right now global prices are at their highest level and if, hopefully, the war in Ukraine comes to an end and no other wars are waged, we can be optimistic that prices will decline in the international market,” he added.
Over 6m Tons Imported Since March 21
A total of 27.61 million tons of essential goods worth $17.53 billion were imported into Iran during the current Iranian year’s first 11 months (March 21, 2021-Feb. 19), registering a 28% and 60% rise in weight and value respectively compared with the similar period of last year, according to the spokesperson of the Islamic Republic of Iran Customs Administration.
“The essential imports accounted for 75% of the tonnage and 38% of the value of total imports during the period under review,” Rouhollah Latifi was also quoted as saying by Mehr News Agency.
The spokesman noted that 24.03 million tons worth $13.67 billion were imported using subsidized foreign currency at the rate of 42,000 rials per dollar, registering a 30% and 77% YOY rise in weight and value respectively.
The essential imports at the so-called “preferential” rate (42,000 rials per dollar) included 6.04 million tons of wheat worth $2.08 billion (up 108% in weight and 157% in value).
Rise in Consumption
“This year, the government bought around 4.5 million tons of wheat from local farmers as part of its guaranteed purchase plan. As we expect domestic consumption of wheat to rise over 11 million tons this year, the deficit had to be imported,” Hojjat Baratali, director general of Sales and Distribution Coordination Department of the Government Trading Corporation, was quoted as saying by IRNA recently.
In the last Iranian year (March 2020-21), said the official, 10.5 million tons of wheat were consumed in Iran.
According to Mortazavi, this year’s wheat production stood close to 5 million tons.
“Drought and water shortage hit after a few years of self-sufficiency. What made matters worse is that the grain, due to its relative low price compared with other animal feed, has been used in livestock and poultry farms,” he added.
The official said the country needs to store at least 3 million tons of wheat for its strategic reserves every year when production is normal, but the figure has to increase to 5 million tons at times when the harvest is hit by drought or other factors.
“Global wheat prices have reached their highest in the past five years. Grains in general have experienced a price rise of up to 80% at times. Russia, the US, Canada, Australia, Argentina, Germany and France are the world’s top wheat producers and Egypt, Iraq and China are the biggest importers,” he added.
German Wheat Exports Boosted by Iran
A rise in euro capped Euronext, underscoring concerns about short-term European exports, although a run of shipments to Iran was boosting export sentiment in Germany, Reuters reported recently.
The USDA pegged US wheat stocks this season above the average trade expectations, although its world wheat stocks forecast was slightly below the mean trade estimates.
In Germany, traders highlighted more loadings for Iran, an active importer this season.
"One ship is currently loading 65,000 tons of wheat in Germany for Iran," a German trader said. "Two more vessels are scheduled to start loading wheat for Iran in Germany in the coming days, one 65,000 tons and one 67,000 tons."
Shipments to Iran could give fresh impetus to Germany's export campaign after strong sales to Algeria earlier in the seasons.
"Iran is shaping up to be a large buyer of German wheat this year, despite heavy competition for sales from Russia, and may overtake Algeria as Germany's largest export customer in coming months," the trader added.