The United States Department of Agriculture (USDA) has raised  forecast for Iran’s 2021/22 wheat imports sharply by 2.0 million tons in October to 4.5 million tons—the country’s largest import volume in 7 years. The projected surge in wheat imports is a response to tightening domestic supplies.

Iran wheat consumption has remained relatively stable as stock levels slid in recent years. Moreover, despite the government’s investment in improving wheat harvests, production is estimated to drop 10 percent from the previous marketing year due to drought conditions impacting yield.

According to the Tehran Times, the Iranian government, which procures wheat at an established price, purchased 4.4 million tons of wheat from farmers between March and August 2021—representing about 3 months of consumption and a third of the domestic crop. The procurement price recently jumped to 75,000 rials/kilogram (approximately $1.781 ) compared to 25,000 rials/kilogram last year, reflecting the country’s tightening wheat supplies and demand for additional wheat procurement.

In order to satisfy domestic demand, the government is therefore forced to import wheat from international sources. Iran’s state Government Trading Corporation (GTC) has been actively tendering for international wheat this year following years of minimal tender activity. While details of its purchases are undisclosed, GTC has bought at least 520,000 tons of wheat since the beginning of the marketing year (Apr-Mar).

Iran wheat imports are primarily sourced from Russia. According to Iran customs data, imports from Russia were over 1.0 million tons in the 2020/21 marketing year. Trade with Russia is anticipated to expand this year with growing import demand. In June, the Iranian Ambassador to Russia stated that imports of Russian wheat could double this marketing year. Since April, shipments of Russian wheat to Iran have already reportedly reached 3.0 million tons.