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Pistachios: Russia deals blow to hopes

March 7, 2022 11:19 AM, Der AUDITOR
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TEHRAN. Russia has dealt a blow to hopes of a possible revival of the nuclear deal with Iran. By demanding the U.S. to provide written guarantees that Moscow’s dealings with Tehran will not be damaged by Western sanctions over the war in Ukraine the conflict has finally hit negotiations in Vienna. A failure to revive the 2015 nuclear deal will have devastating consequences for Iran’s pistachio industry.

Sanctions weigh on exports

The reimposed U.S. sanctions already have far-reaching consequences for Iran’s pistachio exporters. Issue is that it is impossible for Iranians to conduct transactions with foreign banks and that foreign companies refuse to insure shipments from Iran. To make matters worse, Iran's central bank has constructed an artificial exchange rate and exporters are required to exchange foreign money into the NIMA system at a loss. Exporters also need to be highly creative if they want to drive up profitability. Letters of credit, for instance, help to increase exports to Europe and generate more revenue for producers. Iran mainly ships pistachios to Eurasia. Main destinations comprise Europe, China and Russia, India, Iraq and Afghanistan and the United Arab Emirates and other Gulf states.

Since production has slumped to an officially estimated 135,000 mt this season and demand failed to pick up to the same extent as in previous years in the run up to the Lunar New Year in China exports range much lower this year. Zarandieh county in the Markazi Province is particularly hard hit since exports have declined by 19% as compared with last year. Suppliers here mainly ship pistachios to customers in the European Union.

Another issue to consider is the weather as pistachio gardens require around 750 to 1,200 hours of temperatures around the freezing point in winter for the trees to be able to hibernate properly. A good sign is if temperatures range between 0°C and 4°C (32-39.2°F). While pests are destroyed when temperatures hover around the freezing point, anything above 4°C (39.2°F) disrupts hibernation. Producers hope that this weather will last until April. In addition, it should be noted that many businesses will be closed for Nowruz, the Iranian New Year, which starts on 21 March.

Negotiations drive up prices

Suppliers in Iran have pinned their hopes on a possible lifting of sanctions. Things, in fact, looked highly encouraging until the weekend. After months of negotiations between all parties involved in the Joint Comprehensive Plan of Action (JCPOA), which is commonly known as the nuclear deal, officials cautiously signalled that an agreement was possible. International Atomic Energy Agency chief Rafael Grossi even visited Tehran at the weekend to resolve the issue of uranium traces found in several old but undeclared sites in Iran. Iranian representatives promised to resolve this issue by 21 June, which would pave the way for a resumption of the deal. Russia has now, however, demanded written guarantees that its cooperation with Iran would not be damaged by the Western sanctions imposed on Moscow over its invasion of Ukraine. This move certainly poses a threat to the deal, which is no longer treated as a separate issue to the Ukraine crisis.

As negotiations for the deal entered their final stage in Vienna the Iranian rial has gained in value in recent weeks, which has also driven up the export prices for pistachios. This has weighed on export demand. Traders also state that sufficient warehouse inventories are available for export. Domestic demand has, by contrast, risen recently as preparations for Nowruz are underway.

Pistachios, Iran

Inshell, NO

EUR/kg*

Ahmad Aghaei, 24-26

10.24

Ahmad Aghaei, 26-28

9.82

Akbari, 20-22

10.91

Akbari 22-24

10.49

Kale Ghuchi, 22-24

9.99

Kale Ghuchi 24-26

9.65

Fandoghi, 30-32

9.02

Fandoghi 32-34

8.81

FOB Iran

*Please note that these reference prices apply to an order volume of 1 mt. Prices may range lower for higher volumes.

 

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