March 9, 2012 / 12:43 PM / 6 years ago

UPDATE 1-Iran extends wheat buying surge

* Iran continues wheat buys from Russia, Kazakhstan

* Follows surge of buying in past weeks

* Trading houses “wait and see” on payments (Adds detail from paragraph five)

By Michael Hogan

HAMBURG, March 9 (Reuters) - Iran has bought at least 300,000 tonnes of wheat this week largely from Russia and Kazakhstan, European grain traders said on Friday, continuing a major surge in purchases in past weeks.

Iran is facing a poor wheat crop at a time of rising political tension over its disputed nuclear programme. Sales of food such as wheat, rice and sugar to Iran are not banned under sanctions.

“Iran has a major requirement after a poor grains crop but there also seems to be a political element in making such big purchases which are not normal on such a scale,” a trader said. “The country would be in a far weaker state if it was involved in a conflict and was short of food or had to start buying wheat after a conflict started.”

The purchases by state grains agency the Government Trading Corporation of Iran (GTC) were spread between major international trading houses and involved at least five panamax cargo shiploads, traders said. The wheat was largely for April shipment.

“Technically the Iranians have done a remarkable job in making such large purchases without pushing global prices up appreciably,” one trader said. “They have spread their buying around between a large number of origins and are keeping the exact level of their purchases in the dark.”

“It is very hard to assess the total volume as the Iranians are contacting the trading houses for individual talks rather than issuing tenders,” another European trader said. “I would not be surprised if 400,000 to 500,000 tonnes was bought but it is impossible to say.”

Iran had also bought around 2 million tonnes of wheat in February from Russia, Germany, Canada, Brazil and Australia in an effort to build food stockpiles as the United States and Europe implement tough new sanctions over Tehran’s contentious nuclear programme.

On March 1 it was revealed Iran had made a rare purchase of 120,000 tonnes of U.S. wheat

Iran has also asked to import 1 million tonnes of wheat from Pakistan in a barter deal. An Indian delegation is due to arrive in Iran on Mar. 10 for talks about sales of food including wheat

European traders said some payments for the latest purchases were likely to be routed via Russian banks.

“The Iranians have a lot of oil money to spend and the sanctions are not aimed at starving them out,” one trader said. “Basically the attitude is wait and see how they get their payment system sorted out in the next few weeks.”

Reporting by Michael Hogan, editing by William Hardy

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