Importers in Iran have bought at least 250,000 tons of Brazilian raw sugar in the first purchases since western sanctions were lifted on Tehran in January, Reuters quoted “trade sources” as saying on Friday.
One source said the purchases were between 250,000 and 300,000 tons for May to June shipment, while another said the quantity was probably bigger than that.
“Buyers in Iran have clubbed together to make up cargoes given tight financing,” one source said.
Another source said further buying was unlikely for the moment given a rally in ICE raw sugar futures that pushed them to their highest level in more than 2-1/2 years.
“The market has shot up, and that puts a question mark over (further business),” the second source said.
“When the business was booked, the market was 16.5-17 cents a pound. Now it’s 19.68. You can’t make a profit if you take it in now.”
The sanctions against Iran, including banking restrictions, were lifted in January as part of a deal with world powers under which Tehran agreed to limit its nuclear program.
While there were never restrictions on food, continuing trade finance problems together with stockpiling of commodities, including sugar, last year has slowed activity.
Trade sources said Iranian buyers last picked up sugar in the final quarter of last year.
Iran currently produces some 1.5 million tons of sugar annually and imports about 1 million tons.
Private traders are allowed to import 900,000 tons of sugar every year while the government also imports 300,000 tons for its strategic reserves.
In its latest report on Iran’s agribusiness, the Business Monitor International forecast that sugar consumption in Iran will grow 27.6% by 2020 to reach 3.1 million tons, explaining that demand will be mainly driven by population growth and improved macroeconomic conditions following the lifting of sanctions in 2016.
“Iran’s sugar is used in pastry, ice-cream, beverages and chocolate whose consumption is highly dependent on people’s purchasing power.
These are products that people would buy more when they have more money,” says Amir Hossein Shahmir, head of international trade at the Government Trading Corporation of Iran.
