Sanction-hit Iran pays for grain with gold,oil

Iran is seeking to close grain purchases using gold and oil as payment

Written by Reuters | Paris,hamburg | Published: February 10, 2012 1:08 am

Iran is seeking to close grain purchases using gold and oil as payment,and has paid yen for a large volume of wheat as it steps up efforts to beat sanctions that had started to choke imports of food staples,European wheat exporters said. Iran bought at least 2,00,000 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 US could possibly account for part of the volume.

Iran also bought about 2,00,000 tonnes of Brazilian wheat and around 2,00,000 tonnes of German wheat in the past two days for nearby shipment,traders said. They could give no details on how Iran would pay for those cargoes.

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.

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 2,00,000-tonne mostly Australian origin purchase.

“The big multi-national trading houses seem to be switching quickly into payments with other currencies,barter deals with oil or payment in gold as they have the financial expertise to deal with it,” one European trader said. “For the smaller grain trading companies it’s not so easy.”

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