Financial Tribune

Talks started a year ago, but stalled due to lack of financing. The deal involves Russia and Kazakhstan supplying wheat to Iranian millers, who in turn would supply flour to Iraq - a market dominated by Turkey and other countries.

On Tuesday, Russia, Kazakhstan and Iran signed a memorandum outlining cooperation in wheat trading. It was part of wider negotiations on setting up a free trade zone between the three nations and other neighbors.

“In the new agreement, it is mentioned that the buyer can use a credit line opened by a bank. So funding (that was a main concern last year) will be settled,” Kaveh Zargaran told Reuters. He did not specify the banks that can open the credit lines.

“In this case, we will notice wheat transit and swaps will increase from Russia and Kazakhstan,” he added.

Iran was one of the largest markets for Russian wheat until it slashed purchases in 2016 due to Tehran’s self-sufficiency drive. However, Iranian private millers, who are not allowed to use domestic wheat for flour exports, still need imported wheat.

Iran can export flour produced from Russian wheat to neighboring Iraq and Afghanistan, Zargaran said.

“In this regard, wheat imports will double or triple to Iran,” he said. Russia supplied 137,500 tons of wheat to Iran in the previous 2017-18 marketing year, according to SovEcon consultancy.

Iran, which needs 7.5 million tons of feed maize (corn) a year, also plans to import 3 million tons of it from Russia in next Iranian year which starts in March, Zargaran said.

The country also needs 3 million tons of barley, of which 1.5 million tons are expected to be imported from Russia in next Iranian year.