Traders say Iran paying for wheat with gold and oil

Section:

By Valerie Parent and Michael Hogan
Reuters
Thursday, February 9, 2012

http://www.reuters.com/article/2012/02/09/iran-wheat-idUSL5E8D88U5201202...

Iran is seeking to close grain purchases using gold and oil as payment and has paid in yen for a large volume of wheat in its first deal since Western sanctions against Tehran started choking imports of food staples, European wheat exporters said.

Iran bought at least 200,000 tonnes of soft wheat on the world market last week for prompt delivery from private sellers -- mostly of Australian origin -- but some traders said the United States could possibly account for part of the volume.

New financial sanctions imposed since the beginning of this year to punish Tehran over its nuclear programme have ended up playing havoc with Iran's ability to buy imports and receive payment for key food items.

The sanctions have drastically cut its ability to obtain euro- and dollar-denominated financing, forcing Tehran to find alternative ways to pay for its imports.

... Dispatch continues below ...



ADVERTISEMENT

Be Part of a Chance to Discover
Multi-Million-Ounce Gold and Silver Deposits in Canada

Northaven Resources Corp. (TSX-V:NTV) is advancing five gold and silver projects in highly prospective and politically stable British Columbia, Canada.

Check out the exploration program on our Allco gold/silver project :

-- A large (13,000 hectare) property, covering more than 15 square kilometers of a regional mineralized trend just 3km from a recently announced 1.2-million-ounce gold and 15-million-ounce silver deposit.

-- The property hosts historic high-grade silver workings and many mineral showings as well as former mines at the property's northern and southern boundaries.

-- A deep-penetrating airborne geophysics survey has just been completed on the entire property and neighboring deposits and its results are eagerly awaited.

To learn more about the Allco property or Northaven's other gold and silver projects, please visit:

http://www.northavenresources.com

Or call Northaven CEO Allen Leschert at 604-696-3600.



Traders believed the Iranian government had used companies based in Switzerland capable of financing themselves in Asia, and used yen-based contracts to finance the 200,000-tonne deal.

A fall in maize supplies from major exporter Ukraine due to sanction-related payment problems prompted Iranian animal feed makers to turn to wheat, reducing volume for food and compelling the Islamic Republic to turn to the world market.

"The Iranians have just purchased about 200,000 tonnes of wheat from multi-national trading houses," one European trader said. "There is market talk of up to 400,000 tonnes."

In an interview with Reuters on Wednesday, U.S. agri-giant Cargill's vice chairman said shipments were still possible with Iran, notably through payments in currencies other than the dollar.

Iranian Trade Secretary Rahul Khullar told reporters on Thursday that one private Iranian buyer was interested in importing "a very large quantity" of wheat from India.

Iran, which may not be self-sufficient in wheat this season due to an expected lower harvest, usually favours Australian, Canadian, and even in some years U.S. wheat when it imports, due to their high protein levels, as opposed to wheat originating in Argentina, the Black Sea area, or Europe.

Iran, which is still in the market to buy additional wheat supplies, is also considering barter deals to feed its 74 million people weeks before a presidential election, they said.

Grain ships are stuck outside Iranian ports and exports of staples to Iran such as maize, sugar, palm oil, and rice are being hindered as collecting payment from buyers gets harder.

"Grain deals are being paid for in gold bullion and barter deals involving oil are being offered," one trader said. "Some of the major trading houses are involved," he added.

Traders said details of how barter deals work were still unclear as the problem had developed so quickly.

Iranian buyers have in the past sidestepped sanctions by booking business through third countries, especially Dubai in the United Arab Emirates, traders said. But this option had been suddenly closed as the UAE was not allowing sanction-breaking finance, they said.

"As the shipments of grain are so large, barter or gold payments are the quickest option," another trader said.

One European grains trader also said a project for preferential supplies between Iran and Kazakhstan for 2 million tonnes might be reactivated.

"One of the closest (supply) sources is Kazakhstan because the Iranians have solid links with this country but also because the two governments are centralised and deals can be made between states," Michel Ferret, head of the markets division at French farm office FranceAgriMer, said.

This would make even more sense if Iran went ahead with its threat to block the Strait of Hormuz, a vital Gulf oil shipping route, traders also said.

Data from the International Grains Council and the U.S. Department of Agriculture estimate that Iran should import around 500,000 tonnes of wheat in the 2011/2012 season up to the end of June but the sanctions and the lower maize supplies could lead to an increase in wheat needs.

Iran had said in July it would be self-sufficient in the production of wheat in the course of the year and was capable of exporting 2 million tonnes of wheat.

* * *

Join GATA here:

California Investment Conference
Saturday-Sunday, February 11-12, 2012
Hyatt Grand Champions Resort
Indian Wells, California, USA

http://cambridgehouse.com/conference-details/california-investment-confe...

Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006:

http://www.goldrush21.com/order.html

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16



ADVERTISEMENT

Golden Phoenix Discusses Royalty Mining Growth Strategy
on '21st Century Business' on Fox Business Network

Golden Phoenix Minerals Inc. has discussed its royalty mining growth strategy on the Fox Business Network program "21st Century Business" with host Jackie Bales. Golden Phoenix's director of corporate communications, Robert Ian, told how the company narrows its focus to project generation and future royalty streams. He explained why Golden Phoenix believes it's better to own joint-venture interests in several producing mines instead of full exposure to just one project.

"21st Century Business" has been airing for 15 years. Previous hosts have included Gen. Alexander Haig, Gen.l Norman Schwarzkopf, and Secretary of Defense Caspar Weinberger. Golden Phoenix appeared as paid programming on this broadcast.

To view the program with Golden Phoenix, please visit Golden Phoenix's Internet site here:

http://goldenphoenix.us/fox-business-network/