Iran's state grains buyer GTC swept back into international markets, picking up more than half a million tonnes of wheat to shore up domestic stocks as its crop expectations were pared back and to avoid unrest after next week's elections.
The purchases included a premium due to sanctions hindering Iran's payments for imports, although money is readily available for food from plentiful oil revenues.
Dealers said Iran had bought about 600,000 tonnes of milling wheat from the Baltic Sea region and Germany in the last two weeks, including around 200,000 tonnes purchased on Monday.
Iran has oil revenues amounting to billions of dollars in local currencies frozen in bank accounts in countries such as Turkey and India, which trade sources said were likely to have been tapped for the latest sales.
"Iran can use the locked-up funds in bank accounts in one country to buy humanitarian goods including food from any other country," said Mark Dubowitz, who has advised President Barack Obama's administration and U.S. lawmakers on sanctions.
"And those humanitarian goods can be purchased directly and shipped to Iran without having to pass through the country where the bank account is located."
Dealers said Iran also likely used foreign middle-men for some of the purchases to broker deals and arrange financing.