By Jonathan Saul, Polina Devitt and Michael Hogan

LONDON / MOSCOW / HAMBURG, October 13 (Reuters) – Iran is due to purchase a record 8 million tonnes of wheat in the current season, Iranian industry sources said, after its domestic crop was hit by drought, while soaring imports will coincide with high world grain prices exacerbating pressures on the country’s finances.

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

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

The rise in freight rates adds to the challenges facing the new administration of President Ebrahim Raisi, himself subject to US sanctions.

The sharp increase in wheat imports, averaging around one million tonnes annually over the past five years, is necessary to secure bread supplies, as Iran’s wheat harvest is expected to be lower than ‘about 30% 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 sources of international trade to raise their import expectations.

Kaveh Zargaran, president 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 around 8 million tonnes of wheat between March 2021 and March 2022. He said around 2 million tonnes had already been unloaded at ports across the country.

Ferial Mostofi, chairman of the Iran Chamber of Commerce Association’s Investment and Advisory Services Center, separately said the country’s overall wheat harvest is estimated at 10-11 million tonnes, below of the annual average of 15 million tonnes.

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

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

The USDA this week raised its forecast for Iran’s wheat imports to 4.5 million tonnes for the 2021/22 crop year, from 2.5 million tonnes previously estimated, while the IGC estimated 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 that the country is experiencing a shortage of wheat this year and will need significant imports of other crops such as corn, soybeans and other crops separately. barley.

Asgari, quoted by Iranian semi-official Mehr news agency, said Iran would need to import 5-7 million tonnes of wheat.

Iran will buy at a bad time – with world wheat prices WC1 reaching their highest levels since 2013 in August.

The high prices reflect global food security concerns, fueled in part by the economic hardships caused by COVID.

The International Grains Council forecasts a global deficit for the current 2021/22 season (July / June), which will lead the world to consume more wheat than it produces, leaving less in stock at the end of the season. ‘year.

“There is no reason to be concerned about the supply of wheat as a commodity, as providing commodities is a critical issue for the government and it has started to take strong action in this regard. “Agriculture Minister Javad Sadatinejad told state media in September.

SUPPLY IN RUSSIA

In recent weeks, Iran has bought up to 240,000 tonnes of wheat from Russia, according to trade sources.

The United States has repeatedly declared food and medicine shipments to be exempt from sanctions. But the caution of international banks makes it difficult to obtain Western commercial financing.

“Although the United States says importing humanitarian goods is acceptable, foreign exchange shortages are hurting,” an Iranian financial source said. “We are under a lot of pressure.

Iran plans to increase its wheat purchases from Russia using only a small fleet of ships that operate in the Caspian Sea, Interfax news agency reported on September 10, citing Iranian Ambassador to Russia Kazem Jalali. .

Russian wheat exports to Iran reached 2.4 million tonnes between July 1 and September 27, agricultural consultancy firm Prozerno said in a recent memo.

The amount exceeds supplies of Russian wheat to Iran for the entire 2020/21 season, when 1.4 million tonnes were exported, Prozerno added.

(Additional reporting by Nigel Hunt in London, Parisa Hafezi in Dubai and Dubai office and Michelle Nichols in New York and Julie Ingwersen in Chicago; Editing by Veronica Brown and Jane Merriman)

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