Friday, Jan 27, 2012

By Neena Rai and Benoit Faucon

Of DOW JONES NEWSWIRES

LONDON (Dow Jones)--Major European banks, including Rabobank, have halted trade finance for grain or any agricultural products bound for Iran, European banks and traders told Dow Jones Newswires Friday.

Disruptions to trade come as sanctions on Iran, the world's fourth-largest oil producer, begin to tighten. The European Union and U.S. have both introduced trade restrictions on the Central Bank of Iran.

"Rabobank has pulled out of financing grain trades that are destined for Iran," a bank spokeswoman said. Rabobank one of Europe's largest provider of agricultural commodity financing.

"Our bank hasn't touched anything that is destined for Iran," a European grains trader said, adding that as far as he was aware all European banks had halted dealings with the country.

"All physical traders have stopped trading with Iran because of the country's difficulties in obtaining letters of credit," the trader said.

"Many Western countries are avoiding sending panamax vessels to Iran," a London-based ship broker told Dow Jones Newswires. Panamax vessels are vessels that typically carry dry bulk cargo, such as grain, around the globe.

Iran typically imports around 5 million tons of grain a year, most of which is corn.

"It is very likely that Iran is having issues with letters of credit, given the sanctions imposed on them," said Andrey Sizov Sr., senior economist and chief executive of Moscow-based think-tank SovEcon.

According to official port records, at least 11 vessels carrying foodstuffs have been waiting for several days to dock at Iranian ports, due to a "lack of readiness of cargo owners." It is unclear if the delays are tied to sanctions.

Three Asian-flagged vessels carrying sunflower oil are waiting at Imam Khomenei port, as is a Cypriot-flagged vessel carrying corn for livestock usage. A Panama-flagged vessel and a Hong-Kong flagged vessel, respectively carrying corn for livestock and soybeans, are also stuck at Imam Khomenei port, according to the records.

At Amirabad port five Russian-flagged vessels carrying corn and barley are queueing to enter the port.

-By Neena Rai, Dow Jones Newswires; 4420-7842-9450; neena.rai@dowjones.com.

(END) Dow Jones Newswires

27-01-12 1621GMT