Traditionally when Iran purchases wheat they do so from the Black Sea region or Australia, however Australia is coming off two very poor years of wheat harvest and their crop is still in the early growing stages. That coupled with quality issues in Black Sea countries has forced them to purchase U.S. wheat.
"Iran hasn't bought wheat from us since 1981, and of course we remember the political problems at that time with the hostages," says Farm Futures market analyst Arlan Suderman. "But they are so desperate after a drought cut their crop down by a third this year, so they've purchased 43 million bushels of U.S. hard red winter wheat over the last three or four weeks."
According to the USDA Iran may be in the world market to purchase four to five million tons of wheat this year, and the U.S. is where high quality wheat is currently available. That could change in coming months although Suderman says purchasing U.S. wheat could continue.
"They would like to switch to Australia and Argentine supplies once they become available," Suderman says. "But if drought continues in those two countries, Iran may have to continue to buy U.S. wheat as we go into the winter."