Iran taps Caspian Sea route to bolster grain stocks

Iran is approaching Kazakhstan and other Caspian Sea suppliers for fresh wheat deals after buying over 1 million tonnes in recent weeks from global markets as Tehran seeks to bolster strategic stocks after recent elections. Iran, once a wheat exporter, is forecast to need at least 5 million tonnes of imports in the season starting in summer, amid market talk its harvest this year was not as good as hoped.
"There is a new government in place and they have given the green light to buy wheat. It is also Ramazan, so they need to keeping boosting stocks," a Middle East based trade source said. "They will find whatever ways and means are required to secure purchases." Trade sources say the Islamic Republic is picking up cargoes from suppliers in Kazakhstan and Russia and shipping them over the Caspian Sea, a key gateway.
"There have been shipments of Kazakh milling wheat for shipment across the Caspian sold in past weeks and there is interest for more," one European trader said. "The good harvest in Kazakhstan this year will help solve a lot of Iran's need for wheat imports and 40 percent of Kazakhstan's wheat exports this year will either go to Iran or Iraq, with the bias towards Iran."
Kazakhstan's wheat crop is forecast to rise to about 13.5 million tonnes this year from 11.3 million tonnes last year. Rafail Galyamov, board chairman of Ak Bidai joint stock company which runs the grain terminal in the Caspian Sea port of Aktau in western Kazakhstan, said it was ramping up exports to Iran.
"The terminal is now running at its full capacity, and in July so far it has been handling only grain to be shipped to Iran," he told Reuters. "We believe we will handle 50,000 tonnes of wheat (for Iran) this month. "Of course, our exporters have problems - with payments, with money transfers, but they somehow manage and find a way out," he added.
Iranian President-elect Hassan Rouhani, who takes office next month, will need to get the economy back on track after sanctions have slashed oil revenues and added to turmoil for its rial currency. While food is not targeted, Western measures have led to an exodus of shipping companies, hurting the country's vital seaborne trade. Dealers said the wheat buying had partly been made possible by the use of oil revenues in Iran's bank accounts in several countries which had been frozen by sanctions. These funds, however, can be used for humanitarian and food purchases.