Iran buys Indian sugar for the first time in five years

MUMBAI, Feb 26 (Reuters): Indian traders will export raw sugar to Iran for March and April delivery, five trade sources said, the first Indian sugar sales to Tehran in at least five years as Iran struggles to secure food supplies under sanctions imposed by the US.

Under the sanctions, Iran is blocked from the global financial system, including using US dollars to transact its oil sales. Iran agreed to sell oil to India in exchange for rupees but it can only use those rupees to buy Indian goods, mainly items it cannot produce enough of domestically.

Trading houses have contracted to export 150,000 tonnes of raw sugar for shipments arriving in March and April at $305 to $310 per ton on a free-on-board basis, the trade sources told Reuters this week.

"Oil payments have piled up in UCO Bank. Iran is keen to utilize the payments to buy sugar and other food items," said one of the sources, a Mumbai-based dealer with a global agricultural trading firm, who asked not to be identified as he was not authorized to speak to media.

Iran's state buyer, the Government Trading Corporation (GTC), purchased the sugar to ensure ample supplies in the coming months, said a second source, a Mumbai-based exporter. Iran usually buys sugar from Brazil, the world's biggest producer and exporter of the sweetener.

Iran could import as much as 400,000 tonnes of raw sugar from India in 2019 as its local production is not enough to fulfill the demand, he said.