Opinion

Iran Set to Import a Record Amount of Wheat

Wheat
Iran
Published Oct 24, 2021
Following a recent drought that affected Iran’s wheat crop, the country requires a record-breaking 8 million tonnes this year. This jump in imports will coincide with high global grain prices adding to pressure on the country’s finances. Iran suffered its worst drought in 50 years during the 2021 growing season (April to August), leading international trade house sources to raise their expectations for imports. Bread is an Iranian staple and any shortage is a concern for the Middle-Eastern country.

Over the last 5 years, Iran imported an average of 1 million tonnes of wheat. The jump to 8 million tonnes will catapult Iran into a leading wheat importer in the 2021 season. This comprehensive increase in wheat purchases will significantly limit Iran’s capability to import other grain crops including soy or corn as extensively as in previous years. This will ensure adequate bread supply for the country, as Iran’s wheat harvest is expected to be about 30% lower this year, compared to 2020.



According to the Center of Investment and Consultancy Services at Iran’s Chamber of Commerce Association, the country’s overall wheat harvest is forecast at around 10 to 11 million tonnes, lower than the annual average of 15 million tonnes. According to the Grain Supplying Association of Iran, 2 million tonnes have already been unloaded at the country’s ports. Crop forecasting bodies such as the U.S. Department of Agriculture (USDA) and the International Grains Council (IGC), have also estimated a decrease in Iran’s 2021 wheat crop.

Iran's increased wheat imports come at a bad time, as global wheat prices are reaching their highest levels since 2013. The US is the second-largest wheat exporter and Iran has been impacted by sanctions imposed by former U.S. President Donald Trump as well as the COVID-19 pandemic. The sanctions have led to caution from international banks, making it difficult for Iranian firms to obtain Western trade finance. Another point of concern is the inflated global freight rates, adding to the economic hardship caused by COVID-19. According to the International Grains Council, a global wheat deficit is expected in the current 2021/22 season (July/June), leading to the world consuming more wheat than it produces, and leaving less in storage at the end of the year.



Russian supply set to fill the supply gap

Iran will be looking to import a significant quantity of wheat from Russia, the world’s second-largest wheat supplier. Recently, Iran has purchased close to 240K tonnes of wheat from Russia. According to the news agency, Interfax, Iran intends to increase imports of wheat from Russia utilizing a small fleet of vessels operating in the Caspian Sea. According to agriculture consultancy Prozerno, Russian wheat exports to Iran amounted to 2.4 million tonnes during the July 1-Sept 27 period. This amount surpasses the 1.4 million tonnes of Russian wheat to Iran during the complete 2020/21 season.

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