Economy, Domestic Economy

Iran Steps Up Raw Sugar Purchases from Brazil

Iran Steps Up Raw Sugar Purchases from BrazilIran Steps Up Raw Sugar Purchases from Brazil

Iran bought 60,000 tons of Brazilian raw sugar last week in one of the first purchases this year after sanctions were lifted in January with further imports expected in coming months.

The Pakistani financial daily Business Recorder cited a Reuters report as saying that Iran’s state buying agency the Government Trading Corporation bought the cargo from an international trade house for July 15-August 15 shipment.

The deal was priced at 37 to 40 points under the benchmark ICE raw sugar futures contract, which sources said was a competitive price.

Earlier this week, raw sugar prices rallied to their highest in 3-1/2 years, underpinned by a shift of the global market into deficit after years of surpluses.

A GTC tender document seen by Reuters showed offers for the 60,000-ton cargo of Brazilian raw sugar were due by July 4.

Trade sources told Reuters last month that Iran had picked up at least 250,000 tons of Brazilian raw sugar for May to June shipment in a series of deals, adding that the buyers were mainly private importers.

“With payment constraints still ongoing with Iran, international traders are more comfortable being able to transact with GTC as it is a government agency; the financing process is relatively smoother,” one trade source said.

Trade sources said Iran was expected to make further purchases in coming months.

International measures 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 Iran’s food and humanitarian trade, 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.