March 20, 2012 / 4:07 AM / 5 years ago

UPDATE 2-India sells soymeal to Iran, more deals likely

* India sells soymeal to Iran at around $420/T

* Traders eye 100,000 T of more deals in coming weeks

* Indian soymeal more expensive than South American

* Payment in dollars through Dubai-based middlemen (Recasts with quotes, details)

By Naveen Thukral and Ratnajyoti Dutta

SINGAPORE/NEW DELHI, March 20 (Reuters) - Indian traders have sold up to 150,000 tonnes of soybean meal to Iran in recent deals, three trade sources said on Tuesday, as Tehran steps efforts to fight tough Western sanctions that have dented its ability to pay for food imports.

Iran, which typically buys some 100,0000 tonnes of soymeal from India a year, is taking larger volumes from the South Asian nation in a bid to stockpile food with advance payments being made in dollars through Dubai-based middlemen.

"The Indian government is promoting exports to Iran whereas some other countries and even some companies are not keen to do business with Tehran," said one Singapore-based executive with an international trading companies.

"It is much faster to ship cargoes from India to Iran than what it would take from places like Brazil or Argentina."

On Monday, sources said Indian traders had struck deals to export 60,000 tonnes of raw sugar to Iran and Pakistan had decided to ship one million tonnes of wheat in a barter deal, a sign that Tehran was succeeding in limiting the impact of the sanctions.

Food shipments are not targeted under sanctions aimed at Iran's disputed nuclear programme, but financial measures have frozen Iranian firms out of much of the global banking system.

Some vessels turned away from Iran without unloading earlier this year after Iranian buyers were hit by a trade finance squeeze, but it appears that shipments are now arriving successfully.

EXPENSIVE INDIAN MEAL

Iran's purchase has pushed Indian soymeal prices above rival South American cargoes for the first time in a year, making exports uncompetitive to Southeast Asia, India's traditional market.

"India's soymeal has become expensive and it is not viable for buyers in Southeast Asia anymore," said another senior executive with a leading global trading company.

Typically, Indian soymeal is quoted $10 to $15 below Latin American cargoes to win business in some of its top markets such as Vietnam, Indonesia, Malaysia, Japan and South Korea.

Indian meal was sold to Iran at around $420 a tonne, free on board, after which Indian soymeal prices have risen to around $440 to $450 a tonne.

On a delivered basis Indian meal was quoted around $470 a tonne in Southeast Asia, compared with $450 being offered for Argentine shipments.

Iran is likely to buy another 100,000 tonnes of soymeal from India in the coming weeks which could make the commodity, used to fatten animals, more expensive, traders said.

"The window to Iran could reduce exports to traditional destinations in Southeast Asia," said Rajesh Agrawal, coordinator at Soybean Processors Association of India. "Some soymeal export deals to Iran took place earlier this month."

The soymeal cargoes are scheduled to be shipped to Iran in April and May.

Iran is estimated to import 2.1 million tonnes of soymeal in 2011/12, up from 1.7 million tonnes shipped a year ago, according to the U.S. Department of Agriculture.

A delegation of Indian exporters has just returned from a trip to Tehran which aimed to boost overseas sales and partially redress the imbalance in trade between the two, but with no major success.

New Delhi and Tehran have set up a mechanism to use the rupee, which is not freely traded on global markets, for 45 percent of oil dues and to pay Indian exporters in order to skirt western sanctions.

India is Iran's second-biggest oil client after China, buying around $11 billion a year, but its own exports to Tehran are worth only about $2.7 billion. (Reporting by Naveen Thukral)

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