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Iran buying record volume of wheat after worst drought in 50 years – sources

Reference: Reuters

LONDON/MOSCOW/HAMBURG (Reuters) - Iran needs to buy a record 8 million tonnes of wheat in the current season, Iranian industry sources said, after its domestic crop was hit by drought, while the jump in imports will coincide with high global grain prices adding to pressures on the country’s finances.

Bread is a staple in Iran and any shortage would be another blow for the government after violent protests in July, as people took to the streets over water shortages.

Iran’s economy has been hit hard by sanctions imposed by former U.S. President Donald Trump as well as the COVID-19 pandemic, making it difficult for Iran to pay for food and medicine.

Higher freight rates are adding to challenges faced by the new administration of President Ebrahim Raisi, himself subject to U.S. sanctions.

The big increase in wheat imports, from an annual average of about one million tonnes during the last five years, is needed to ensure bread supply as Iran’s wheat crop is expected to be some 30% lower this year, industry sources familiar with the matter said.

The country suffered its worst drought in 50 years during the 2021 growing season, leading international trade house sources to raise their expectations for imports.

Kaveh Zargaran, chairman of the Grain Supplying Association of Iran, a trade body whose members are involved in importing grains, told Reuters the country will need to import about 8 million tonnes of wheat in the March 2021-March 2022 year. He said about 2 million tonnes had already been unloaded at the country’s ports.

Ferial Mostofi, president of the Center of Investment and Consultancy Services at Iran’s Chamber of Commerce association, said separately the country’s overall wheat harvest was estimated to be between 10 to 11 million tonnes, falling short of the annual average of 15 million tonnes.

“This radical level of increase in wheat imports will impact and severely limit Iran’s ability to import other soft commodities as extensively as previous years including soy or corn,” Mostofi said.

The comments from the Iranian trade show the situation is more serious than indicated by current crop forecasts for Iran from bodies such as the U.S. Department of Agriculture (USDA) and the International Grains Council (IGC).

The USDA currently projects Iran will import 2.5 million tonnes of wheat during the 2021/22 season while the IGC estimates that imports will total 2.4 million tonnes.

Iranian government officials did not immediately respond to requests for comment.

Mohammad Javad Asgari, deputy head of Iran’s parliamentary agriculture committee, said in July the country was experiencing a shortfall of wheat this year and would separately require large imports of other crops such as corn, soybeans and barley... Read More