Iran will have to import 7.5 million tonnes of wheat this year, President Hassan Rouhani said in remarks published Wednesday, in what international traders said was a surprisingly large upward revision of initial market projections.
Iran's imports can fluctuate widely from year-to-year due to erratic domestic harvests, but imports for 2013-14 are forecast at four million tonnes by the U.S. Department of Agriculture.
Rouhani said food security was a strategic issue for Iran at a time when the country is facing sanctions.
"When it comes to basic products like wheat, barley, rice and corn we have shortcomings," Mehr news agency quoted Rouhani as saying in an interview on state television broadcast on Tuesday evening.
"Unfortunately, this year, out of 10 million tonnes of wheat that we need, we will import 7.5 million tonnes," he added referring to Iran's calendar year which ends in March 2014.
International traders were surprised by the larger import figure, but added that payment issues attached to sanctions and tighter government budgets were easing.
"The Iranians need to buy. There is no doubt about it and this is clearly much more than was anticipated," a Middle East-based trade source said.
"Payment issues related to the central bank and other ministries, which had caused cargoes to have been stuck weeks ago, appear to have been resolved. It looks like Rouhani has given the green light to buy commodities and we have already seen raw sugar shipments picking up of late," another Middle East trade source said.
The European Union and the United States imposed sanctions aimed at discouraging Tehran's nuclear program. Iran insists that its atomic program is for peaceful purposes.
"Message to farmers"
While the sanctions do not target food or animal feed shipments, financial measures had frozen Iranian companies out of much of the global banking system, hindering payments.
However, dealers have said the Islamic Republic has successfully used money in accounts which had been frozen by sanctions to make major purchases.
In July, traders reported an almost half a million-tonne wheat purchase partly financed by frozen oil revenue in Iran's overseas bank accounts.
Rouhani said the government would address complaints by some farmers that the guaranteed purchase price offered by the government was lower than the price they could get by exporting their harvest, and that his government would study the issue.
He added he would prefer Iranian farmers to provide their products to the country at a lower price than it cost to import them. "This is the path to take," he was quoted as saying.
"In my view, it is rather a message of the new president to local farmers than a real estimate of their import needs. Some reports refer to leaks of Iranian wheat to Iraq because the price paid to Iraqi producers is more attractive," a European trader said.
-- Yeganeh Torbati
reports for Reuters from Dubai. Additional reporting for Reuters by Valerie Parent in Paris and Jonathan Saul and Nigel Hunt in London.