Exclusive: Iran Food Stockpiling Grows as Grain Ships Near Port
Vessels carrying at least 360,000 metric tonnes (396,832 tons) of grain are lined up to unload in Iran, Reuters shipping data showed on Thursday, a sign that Tehran is succeeding in stockpiling food to blunt the impact of tougher Western sanctions.
Iran has been shopping for wheat at a frantic pace, ordering a large part of its expected yearly requirement in a little over one month and paying a premium in non-dollar currencies to work around toughened Western sanctions and avoid social unrest.
Food shipments are not targeted under western sanctions aimed at Iran’s disputed nuclear program, but financial measures have frozen Iranian firms out of much of the global banking system.
Since the new year, some vessels had turned away from Iran without unloading after Iranian buyers were hit by a trade finance squeeze, but Thursday’s data appears to show that shipments are now arriving successfully.
In an effort to blunt the impact of the sanctions, Iran has even begun buying wheat from its enemy - the United States.
The sanctions make it difficult to obtain letters of credit or conduct international transfers of funds through banks.
So instead, Iran has embarked on an ambitious buying spree, purchasing around 2 million metric tonnes of wheat since February at a premium to international market prices in currencies including Japanese yen and Russian roubles.
“There is no doubt in my mind it is geopolitical hedging. They are trying to get as much (wheat) as they can in the country to blunt the effect of any further escalation in international sanctions,” Rabobank commodities analyst Nick Higgins said.
“I think they hit the market hard and early and that from their perspective limited the chances that anyone could react to such large purchases,” he added.