Kazakh port starts loading wheat for Iran

March 28. Reuters. ASTANA/HAMBURG

By Raushan Nurshayeva and Michael Hogan

* Kazakh port loads 30,000T grain for Iran since March 16
* Volumes split 50-50 between wheat and barley to mid-April
* Wheat shipments to rise after mid-April
* Traders say Iranian buyers paying cash, terms tough

Kazakh port starts loading wheat for IranKazakhstan’s only grain-exporting port has loaded its first 15,000 tonnes of wheat as well as 15,000 tonnes of barley, all destined for Iran, in the past 12 days, a port official told Reuters on Wednesday.

Yerkin Delmanov, deputy chairman of the Ak Bidai grain terminal in the Caspian Sea port of Aktau, said 30,000 tonnes of grain had been loaded for Iran since March 16.

Kazakhstan’s relative proximity to Iran has made purchases from the former Soviet republic a viable alternative for private Iranian buyers in the face of international sanctions, although tough terms with cash payment in advance are being requested.

Kazakhstan, struggling with logistical bottlenecks to export a record post-Soviet crop of 27 million tonnes, expects to ship at least 500,000 tonnes of grain to Iran in this season, Deputy Agriculture Minister Muslim Umiryayev has said.

That level would at least match last season’s shipments to the Islamic republic, which was the biggest taker of Kazakh grain in the 2009-10 marketing year before volumes dropped off last year.

“If since September only barley was being shipped, from the middle of March volumes have been split 50-50 between barley and wheat,” Delmanov said.

He said the terminal would maintain this loading ratio until April 15. Thereafter, wheat would account for all remaining grain shipments from the port this season.

“There have been a number of purchases by private Iranian buyers of Kazakh wheat, which have been paid for in cash to overcome the sanctions,” one European trader said. “These usually involve small shipments of about 6,000 tonnes.

“Private Iranian mills are facing an extreme disruption to their traditional supplies because of the payment problems caused by the sanctions,” the trader said.

Traders said some of the wheat had been bought at over $260 a tonne free-on-board. By comparison, Egypt paid $259 per tonne for Argentine and $263 a tonne for U.S. wheat free-on-board in tender results announced on Wednesday.

“More buying of Kazakh wheat is expected by Iranian private and state buyers in the coming weeks as the navigation on the sea normalises after the winter freeze-up,” another trader said.

“Kazakh wheat sellers have been taking a hard line with Iran and demanding payment in advance in cash,” the second trader said.

“Larger shipments are required, but around 6,000 tonnes is pretty much the limit at which you can make cash payments. A 6,000 tonne consignment would cost about $1.5 million,” the trader added.

KAZAKH SURPLUS, IRAN DEMAND

The sanctions, imposed by the United States and the European Union since the beginning of this year to punish Iran for its nuclear programme, have impeded the Islamic republic’s ability to obtain euro- and dollar-denominated financing.

“There is maybe some haste (from Iran) as it faces mounting sanctions, but at the end of the day, their natural supplier will be Kazakhstan,” a European trader said. “That’s the logical origin, and Kazakhstan also needs to clear big surpluses.”

The Ak Bidai terminal in Aktau is owned 100 percent by state-owned trader the Food Contract Corporation, although private traders can also use the port. Since September, almost all grain shipments from the port have been Iran-bound.

Delmanov said trans-Caspian shipments of Kazakh grain to Iran – exclusively barley – totalled around 330,000 tonnes between Sept. 1 and March 16.

In total, Kazakh officials hope to export a total of around 15 million tonnes of grain this season.. It also supplies world markets via ports on the Black and Baltic seas, although shipments are often limited by a shortage of rail cars.

Authorities plan to build a second terminal on the Caspian in 2014 or 2015, with annual capacity of between 1.5 million and 2 million tonnes of grain.

http://www.reuters.com/article/2012/03/28/grain-kazakhstan-idUSL6E8ES9PB20120328

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