Traders: EU banks halt Iran grain trade finance

Print version
Jan. 26, 2012, 8:33 p.m. | Business — by Reuters


LONDON/HAMBURG, Jan 26 (Reuters) - Major European Union banks have pulled back from financing grain shipments destined for Iran, hampering trade with the major importer of maize, banking and trade sources said on Thursday. "It is now a fact that no EU banks will do trade financing for Iran destination cargoes of grains, oilseeds or whatever," one European grain trader said.

"The bottom line is it is very difficult to work trading to Iranian destinations through banking systems. Some Iranian buyers are seeking to use other payment methods avoiding letters of credit, basically direct payment, but this is unworkable for large-size shipments."

One European banking source said the major banks had halted trade financing for agricultural products destined for Iran and that any new deals would have to be backed by smaller entities.

Iran imports around 4.5 million tonnes of grain a year, including about 3.5 million tonnes of corn, the leading world grain for animal feed, according to International Grains Council figures. It ranks among the top 10 global importers of maize.

Its key corn suppliers include Brazil, Argentina and Ukraine.

"As far as I know there are six panamax and three handy-size bulk carriers waiting in the anchorages off Iranian ports and unable to unload because of payment problems," the trader said.

Panamax vessels carry around 55,000 tonnes of grain and handy-size vessels roughly 30,000 tonnes, indicating a potential total tonnage of about 420,000 tonnes held in ships off Iran.

Most Iranian grain deals are between private entities, traders said.


EU governments agreed on Monday to an immediate ban on all new contracts to import, buy or transport Iranian crude oil, a move to put pressure on Tehran's disputed nuclear programme by shutting off its main source of foreign income.

A sharp decline in the value of Iran's currency, linked to Western sanctions, has also created payment difficulties.

"The Iran trade is in chaos with devaluations, and payment difficulties are causing ships to be delayed. It is hard to guess the numbers, but delays of up to 60 days are being talked about," another European trader said.

An industry source in Ukraine said the country's exports to Iran had been halted as traders waited for further developments.

"Some sent a few ships to Iran and (are) ready to ship more, but they are waiting," the industry source said.

A European sugar trade source said that, according to his records, the last sugar deliveries to Iran were reported in November. He did not expect any of the vessels lined up offshore Iran to be carrying sugar.

"I expect the Iranians to buy sugar again - in the June to August period, or possibly a little earlier," the source said.

Iran is expected to import about 1.6 million tonnes of sugar in 2011/12 (October/September), according to the International Sugar Organization's latest quarterly report issued in November.
The Kyiv Post is disabling its online comment section due to an increase in trolls, violent comments and other personal attacks. Other news organizations worldwide have taken similar steps for the same reasons. The Kyiv Post regrets having to take this action. The newspaper believes in a robust public debate, but the discussion must be constructive and intelligent. For the time being, the Kyiv Post will allow comments on its moderated Facebook group The newspaper will consider hosting online comments again when circumstances allow. Thank you from the Kyiv Post.


© 1995–2015 Public Media

Web links to Kyiv Post material are allowed provided that they contain a URL hyperlink to the material and a maximum 500-character extract of the story. Otherwise, all materials contained on this site are protected by copyright law and may not be reproduced without the prior written permission of Public Media at
All information of the Interfax-Ukraine news agency placed on this web site is designed for internal use only. Its reproduction or distribution in any form is prohibited without a written permission of Interfax-Ukraine.