By Tim Lister and Emily Smith CNN
Iran is buying American wheat for the first time in three years as it seeks to hedge against the growing impact of sanctions and weather-related crop shortages. Some 120,000 tonnes of hard red winter wheat grown in the Plains is on its way to the Islamic Republic, according to the U.S. Department of Agriculture. The sale of another 60,000 tonnes has been finalized, according to trade sources, and Iran may ultimately buy some 400,000 tonnes of U.S. wheat this year.
The purchases are part of a massive effort by the Islamic Republic to build up its grain stockpiles amid growing difficulties in financing imports of everything from steel to palm oil. At the same time, Iranian companies are devising elaborate workarounds to find new markets for crude oil exports.
Exports of U.S. wheat to Iran are legal. U.S. and European sanctions against Iran exempt agricultural products. The major U.S. commodity traders - Bunge, Archer Daniels Midland and Cargill - won't comment on whether they were involved in the deals, but Cargill told CNN that it "does sell agricultural commodities to Iran as food is specifically excluded from the sanctions" implemented because of Iran's nuclear program.
"We take great care to ensure that these sales respect both the spirit and the letter of the law while trying to make sure that ordinary people are not deprived of basic foodstuffs," a Cargill spokeswoman said.
According to USDA figures, 1,564,000 tonnes of U.S. wheat were exported to Iran in 2008, when the country was suffering a drought, and 312,000 tonnes the following year. Iran has also bought smaller amounts of U.S. soybeans and corn.
Once again, analysts say dry weather is in part driving the sales.
"Iran's appetite is driven by drought, a desire to build up grain inventories and hedging against the future impact of sanctions," says Shelley Goldberg, director of global resources and commodities strategy at Roubini Global Economics. "Inventories were getting quite low last year."
State-owned and private Iranian companies are devising ways to overcome the shortage of hard currency, using barter, gold and currencies such as the Indian rupee and Russian rouble. Traders say it also appears that Iran's Central Bank has stepped in, making foreign exchange available to facilitate imports.
Iranian importers are also looking to Pakistan for several hundred thousand tonnes of rice and wheat this year as part of a complex barter deal. Pakistan has a wheat surplus.
A spokesman at Pakistan's Ministry of Water & Power, Tanveer Alam, told CNN Monday that Pakistan was planning to export one million tonnes of wheat in exchange for iron ore and fertilizer.
Such elaborate deals are making up for difficulties with more conventional trade relationships. "Even though wheat and agricultural products are not targeted by sanctions, there is a growing reluctance to do business with Iran. It's a case of bad karma,' says Goldberg.
In recent weeks, several cargoes of grain destined for Iranian ports have been diverted to other countries because of payment problems, according to commodity traders. U.S. and European sanctions against some 30 Iranian banks have produced what financial sources call a "chilling effect" - with banks and currency dealers less willing to provide letters of credit for Iranian imports and exports.
Over the weekend, Iran was further isolated from the global financial system when many of its banks designated by European sanctions were blocked from using SWIFT, the messaging system that supports international bank transfers. Those banks include Mellat, Post, Saderat and Sepah as well as the Iranian Central Bank.
Israeli Finance Minister Yuval Steinitz was quoted in Israeli media over the weekend as saying that cutting off SWIFT was a "dramatic step that is liable to bring about the collapse of Iran's economy."
Trading and banking sources contest that view, saying Iran has proved ingenious at circumventing sanctions and mitigating their effect. They said it is by regional standards a diversified and self-reliant economy.
The Islamic Republic is also finding new destinations for its crude oil, although analysts speculate that it often has to sell at a discount to market rates. Shipping sources say Iran is increasing deliveries to Asian customers - especially in China, South Korea and India - as the European Union prepares to ban all imports and Japan diversifies its sources of crude.
The European Union ban comes into effect from July 1. But that ban, agreed in January, might yet be revised to provide Iran a significant loophole.
Originally it covered Iranian crude carried on any ship insured in the European Union. More than 90% of the world's oil tankers are covered through insurance "clubs" in London. But one reinsurance source in London says he expects the proposed sanctions to be diluted when EU foreign ministers meet later this week to exempt ships that are owned outside the European Union even if insured there. This would make it easier to move Iranian crude.
India has lobbied for a revision of the sanctions regime and made it clear that it will only abide by U.N.-mandated measures.
Chinese shippers have already made it clear that they will continue to take Iranian crude and if necessary seek other sources of insurance. About one-fifth of Iran's crude exports go to China. Hong Kong media quoted a senior official of the China Shipping Development Co. as saying Friday that the Chinese government would take measures to ensure the volume of oil imports from Iran would not drop.
Even so, financial sanctions against Iran continue to complicate the country's trade.
In Gulf trading houses, the unofficial value of Iran's rial has declined by half over the past year. Currency exchange firms in the Gulf emirates are reluctant to trade in the rial for fear of being tainted by association with banks sanctioned by the United States and European Union.
CNN's Reza Sayah contributed to this report
Way cool! Some extremely valid points! I appreciate you writing this article plus the rest of the site is also very good.
Aw, this was a really nice post. Taking a few minutes and actual effort to produce a top notch articleÖ but what can I sayÖ I procrastinate a whole lot and never manage to get anything done.
When I originally left a comment I appear to have clicked on the -Notify me when new comments are added- checkbox and now every time a comment is added I receive 4 emails with the exact same comment. Is there a means you are able to remove me from that service? Thanks!
I'm extremely pleased to uncover this web site. I want to to thank you for ones time due to this wonderful read!! I definitely liked every bit of it and i also have you book-marked to check out new stuff in your blog.
You made some decent points there. I looked on the internet to find out more about the issue and found most individuals will go along with your views on this site.
When I originally commented I appear to have clicked on the -Notify me when new comments are added- checkbox and now each time a comment is added I get four emails with the same comment. Is there a means you can remove me from that service? Thanks a lot!
Itís hard to come by educated people in this particular subject, but you sound like you know what youíre talking about! Thanks
You've made some decent points there. I looked on the web to find out more about the issue and found most people will go along with your views on this website.
Great article. I am experiencing a few of these issues as well..
Itís hard to find educated people about this subject, however, you sound like you know what youíre talking about! Thanks
Great information. Lucky me I found your blog by accident (stumbleupon). I have bookmarked it for later!
This is a really good tip particularly to those new to the blogosphere. Short but very accurate informationÖ Thanks for sharing this one. A must read post!
Great info. Lucky me I found your blog by chance (stumbleupon). I've saved as a favorite for later!
An impressive share! I have just forwarded this onto a co-worker who was doing a little research on this. And he actually ordered me dinner because I discovered it for him... lol. So let me reword this.... Thanks for the meal!! But yeah, thanx for spending some time to talk about this topic here on your website.
After going over a number of the blog posts on your site, I honestly appreciate your way of writing a blog. I bookmarked it to my bookmark site list and will be checking back soon. Please visit my website too and tell me what you think.
Spot on with this write-up, I truly think this website needs far more attention. Iíll probably be back again to read through more, thanks for the info!
Right here is the right site for anybody who wants to understand this topic. You understand a whole lot its almost tough to argue with you (not that I actually will need toÖHaHa). You certainly put a brand new spin on a subject that's been written about for many years. Excellent stuff, just great!
Hi, I do believe this is a great website. I stumbledupon it 😉 I am going to revisit yet again since i have saved as a favorite it. Money and freedom is the best way to change, may you be rich and continue to help other people.
Best view i have ever seen !
After checking out a handful of the articles on your web page, I truly appreciate your way of writing a blog. I bookmarked it to my bookmark website list and will be checking back in the near future. Please check out my web site too and let me know how you feel.
I truly love your site.. Very nice colors & theme. Did you build this site yourself? Please reply back as Iím trying to create my own personal blog and want to find out where you got this from or just what the theme is called. Many thanks!
Howdy! This post could not be written any better! Looking through this post reminds me of my previous roommate! He always kept preaching about this. I will send this information to him. Pretty sure he's going to have a good read. Thanks for sharing!
You're so interesting! I don't believe I've truly read a single thing like that before. So wonderful to discover somebody with original thoughts on this issue. Seriously.. thank you for starting this up. This web site is something that is required on the web, someone with some originality!
Saved as a favorite, I really like your site!
Good blog you have got here.. Itís difficult to find quality writing like yours these days. I seriously appreciate individuals like you! Take care!!
You made some really good points there. I checked on the web to find out more about the issue and found most individuals will go along with your views on this website.
I was more than happy to uncover this page. I wanted to thank you for ones time for this fantastic read!! I definitely appreciated every bit of it and i also have you saved as a favorite to see new information in your website.
I was able to find good info from your articles.
I would like to thank you for the efforts you've put in penning this site. I'm hoping to check out the same high-grade blog posts from you in the future as well. In truth, your creative writing abilities has inspired me to get my very own site now 😉
The next time I read a blog, I hope that it won't disappoint me as much as this particular one. After all, Yes, it was my choice to read through, but I really believed you'd have something useful to talk about. All I hear is a bunch of moaning about something you could fix if you were not too busy looking for attention.
I was extremely pleased to discover this site. I want to to thank you for your time for this particularly wonderful read!! I definitely savored every bit of it and i also have you book-marked to see new things on your site.
I used to be able to find good advice from your articles.
Hi, I do believe this is a great web site. I stumbledupon it 😉 I will return once again since I book-marked it. Money and freedom is the best way to change, may you be rich and continue to help other people.
You're so awesome! I don't suppose I've truly read a single thing like this before. So great to discover someone with a few unique thoughts on this issue. Really.. thank you for starting this up. This site is one thing that is needed on the internet, someone with a bit of originality!
You're so interesting! I do not believe I've truly read through anything like this before. So wonderful to find another person with some genuine thoughts on this subject matter. Really.. many thanks for starting this up. This site is one thing that's needed on the web, someone with some originality!
Your style is very unique compared to other people I have read stuff from. Thanks for posting when you've got the opportunity, Guess I'll just book mark this site.
how long has hydroxychloroquine been around malaraquin hydroxycloriquin
tadalafil 20mg side effects generic cialis tadalafil erectafil-5
Everything is very open with a very clear description of the challenges. It was definitely informative. Your website is useful. Thank you for sharing!
Iím impressed, I have to admit. Seldom do I encounter a blog thatís both equally educative and entertaining, and without a doubt, you've hit the nail on the head. The problem is something which too few people are speaking intelligently about. Now i'm very happy that I came across this in my search for something regarding this.
cloriquin hydroxychloroquine works aralen for lupus
buy tadalafil tadalafil contraindications research chemicals tadalafil