Pakistan yet to ship wheat to Iran in barter deal-sources

Fri Apr 12, 2013 9:28am EDT

* Barter still deadlocked more than a year since being proposed

* Iran waiting for outcome of new harvest before fresh purchases

By Michael Hogan

HAMBURG, April 12 (Reuters) - No shipments have been made of wheat from Pakistan to Iran under a one million tonne barter deal, proposed in March last year and agreed in August 2012, as payment issues are still unresolved, trade sources familiar with the situation said on Friday.

An initial consignment of 100,000 tonnes was due to be delivered to Iran in mid-February but has not been shipped to date, traders said.

"There is still no shipping schedule and it appears no agreement on the deal at an inter-government level," one trade source said.

Payment had been agreed for a reduced 35,000 tonnes of Pakistani wheat but this will not be shipped as the contract period has expired, the sources said.

The barter deal was to involve Iran exporting fertiliser and iron ore to Pakistan in exchange for wheat. But it has been deadlocked over price and quality.

In August 2012, Pakistan agreed a price of $300 per tonne for wheat. Current Pakistani wheat export prices are $10-$15 a tonne higher, traders said.

The barter arrangement was among a series of wheat deals reached by Iran in early 2012 as western sanctions disrupted its international trade.

The European Union and the United States imposed sanctions meant to discourage Tehran's disputed nuclear programme, which they say has a military purpose. Iran rejects these allegations and says its atomic work is peaceful.

Western sanctions do not target food shipments, but financial measures have frozen Iranian firms out of much of the global banking system, making it difficult to pay for imports on which Iran relies for much of its food.

"Iran has been buying a lot of grain elsewhere earlier this year and does not seem to be under much pressure to complete the barter deal," another trader said. "I have not seen any other major purchases by Iran in recent weeks, they seem to be waiting to see how their harvest turns out."

Iran had in March started building grain stocks again, with purchases of wheat from Australia and Germany, plus maize from Ukraine, traders said on Mar. 21. Germany has also been heavily exporting wheat to Iran.

India has been paying for Iranian crude oil imports in rupees, which can in turn be used by Iran to buy Indian commodities including rice and soymeal. (Reporting by Michael Hogan; editing by Veronica Brown and Keiron Henderson)

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