Payment issues slash Iran’s 2020 corn imports by almost 50%

The impact of increased sanctions on Iran appears to have dented the country’s ability to import essential feed requirements such as corn, with domestic sources citing a lack of financing and access to currency as the reasons for an apparent fall in import activity, trade sources have told Agricensus.

The corn import pace through the first six months of the calendar year is the slowest since 2014. As of the January-June period, Iran has imported just 1.36 million mt of corn.

That compares with an average of 2.67 million mt imported during the same period over the last seven years.

The situation could also spell problems for Ukraine and Brazil - two countries that have emerged as regular trade partners for the Middle East country, particularly when sourcing staple feeds such as corn.

Iran is one of the world’s biggest importers of the grain. The USDA estimates that its demand for imports has increased year-on-year by around 8% since the 2014/15 marketing year.

The US agency predicted stable imports of 9 million mt for both 2018/19 and 2019/20 before a rise to 10 million mt in 2020/21. Both Ukraine and Brazil-based sources say they are struggling to see the same level of demand as last year, however.

“The economic sanctions there make negotiations very difficult... getting credit and even moving money in banks,” one Brazil-based market source said.

“[Imports] are lower, and apparently any private deals are not certain to be executed,” a trader said, with an Iran-based source saying the country is likely to import less due to a “lack of currency”.

Iran increased its corn imports between 2015 to 2018 when an international deal over Iran’s nuclear program was implemented.

But in November 2018, the US government walked away from the deal when President Donald Trump took office and renewed sanctions.

Iran’s corn imports remained high, however, with only a small slowdown recorded through 2018. The country was at the time looking to build stocks ahead of the expected imposition of more sanctions.

But as the sanctions tightened, more sectors of the economy were affected. Companies selling grains into Iran faced problems with payments, sparking the slowdown in trade.

On top of that, Iran is thought to have been hard hit by the Covid-19 pandemic in what is likely to have dealt another significant blow to the country’s economy and its potential import slate.

Brazil has been the main exporter of corn into Iran, supplying 5.4 million mt in 2019 and making Iran the second biggest destination for Brazilian corn, only surpassed by Japan’s 6.8 million mt, according to the Agricensus Export Dashboard.

Russia and Ukraine followed Brazil as the biggest exporters, exporting 1.33 million mt and 960,870 mt respectively to Iran. 

Current line-up data suggests Brazil’s ports will handle around 650,000 mt of corn exports for Iran between now and the end of August.

That compares with 725,000 mt between July 23 and August 9, 2019, according to line-up data from July 24, 2019.

The country is also a significant importer of soybeans and wheat. The USDA expects wheat imports to almost double in 2020/21 to 1.2 million mt after the country relaxed import requirements.

It also expects soybean imports to rise by a more modest 2% to 2.3 million mt.