Iran Weighing Wheat Ex-Im Needs

Iran aims to ramp up wheat exports to clear a hefty surplus supported by a government self-sufficiency drive, but may continue to import some wheat to meet the quality requirements of local millers, an industry group said.

The government has prioritized wheat–a heavily consumed staple in Iran–in domestic grain production in the face of declining water resources and has said it hopes to revive exports after halting imports earlier this year, reads a report by UkrAgroConsult—a Ukraine-based group consulting/information services in the agricultural and food industries of the Black Sea region.

“Iranian authorities earlier this month reported wheat stocks of just over 12 million tons and government officials have suggested this would allow 3 to 4 million tons for export,” Kaveh Zargaran, secretary-general of the Federation of Iranian Food Associations, said.

“The wheat stocks are more than we need, so we don’t need to import for quantity,” Zargaran, who also chairs the agricultural commission at the Tehran Chamber of Commerce Industries, Mines and Agriculture, told Reuters in an interview.

“But maybe in the coming months we will need to import a little high-gluten wheat. The private sector says it requires 1 million tons to fulfill market needs until next summer.”

Iran produced about 14 million tons of wheat this year, the highest level in nine years, but some of the crop does not offer the high-gluten content that local millers seek for bread-making.

Zargaran noted that the government has progressively raised the price it pays farmers for wheat and plans to lift the rate to 14,000 rials per kilo ($0.438, or $438 per ton) in the next harvest from 12,700 rials per kilo ($398 per ton) this season.

This compares with a price of $192.50 a ton, excluding shipping, paid by Egypt, the world’s biggest wheat importer, in a tender on Friday to buy 60,000 tons of wheat from Russia, one of the cheapest wheat suppliers to the global market.

Iran imported large volumes of wheat in recent years to guarantee food security in the face of international sanctions linked to its nuclear program, restrictions that were lifted this year following a diplomatic agreement in July 2015.

“The government ordered a freeze on wheat imports in the 2016/17 Iranian fiscal year that started in March, although previously awarded licenses have led to importers bringing in about 1.5 million tons in the first half of the year,” Zargaran said.

“Iran also aims to expand the export of wheat flour but is currently unable to compete with cheaper Turkish supply in key import markets such as Iraq.” Iranian mills have total a flour-making capacity of around 20 million tons, above estimated domestic demand of about 12.5 million, according to a presentation given by Zargaran at last week’s Global Grain conference in Geneva, Switzerlans.