Iran. Over 14 million tons of wheat were produced during the eight months

28.12.2016

Iran Mercantile Exchange is listing wheat for exports for the first time today.

A total of 20,000 tons of durum wheat are up for sale as of Wednesday, IRNA reported.

Founded in 2006, IME is a commodities exchange located in Tehran. It trades in agricultural, industrial and petrochemical products in the spot and futures markets. It is mainly a domestic or regional market with the ambition of going international in the future.

Over 14 million tons of wheat were produced during the eight months to November 20, more than 11.5 million tons of which worth 145 trillion rials ($4 billion) were purchased by the government for its strategic reserves.

A ceremony was held earlier this month to celebrate bumper wheat harvest and self-sufficiency in the production of the crop.

“In 2013-14, Iran produced 97 million tons of agricultural products. This year [started March 20], agricultural production has already reached 117 million tons,” President Hassan Rouhani said on the occasion.

In its latest report on Iran’s agricultural sector, the Business Monitor International estimates that Iran’s wheat production will reach 16 million tons by 2019-20 and wheat yields are expected to improve, because of the use of modern technology, greater access to inputs and a larger area of the country benefiting from new irrigation methods.

The Government Trading Corporation of Iran–a state-owned company specializing in the purchase, import and distribution of essential foodstuff–has taken measures to raise money for funding the government's guaranteed purchase of wheat, as well as other agricultural products, by selling bonds this year.

IME hosted the sale of 32 million wheat Salaf contracts in September. As such the GTC raised 26.5 trillion rials ($745.2 million).

Salaf is an Islamic contract designed to resemble futures contracts and used to forward sell a commodity with a predetermined interest for the period.

The wheat Salaf contracts with six months maturity are sold below face value and estimated to yield 20% interest per annum.

In November, GTC followed up by selling 10 trillion rials ($278.8 million) of Murabaha contracts for wheat on Iran Fara Bourse.

Murabaha is another Islamic financing structure in which an intermediary buys a property with a free and clear title. Similar in structure to a rent-to-own arrangement, the intermediary retains ownership of the property until the loan is paid in full. The two-year bonds bear 20% interest per year.

GTC Managing Director Ali Qanbari said last month that about 3 million tons of wheat in excess of domestic need will be exported to neighboring countries in the near future.


financialtribune.com

Readers choice: TOP-5 articles of the month by UkrAgroConsult