Reuters News - Exclusive: Syria strikes big new Russian wheat deal via local firms - source

By Maha El Dahan | DUBAI

Syria's state grain buyer has signed contracts with local traders for 1.2 million tonnes of Russian wheat, a government source said, the country's second attempt at a huge wheat deal since October as it tries to secure supplies of the food staple.

"We have signed six contracts each for 200,000 tonnes. These are local firms who will source the Russian wheat for us," the government source close to the deal told Reuters, declining to name the firms involved.

The government has allocated 52 billion Syrian pounds ($101 million) for a portion of the deals, the source said.

Russia's agriculture ministry declined to comment.

Flat bread is a subsidized staple for Syrians, who have suffered under a conflict estimated to have killed several hundred thousand people and forced millions to flee their homes.

Syria's state buyer, the General Establishment for Cereal Processing and Trade (Hoboob), had struck a deal in October to buy one million tonnes of wheat from its ally Russia to feed government held areas and prevent bread shortages after a sharp drop in the country's wheat production last season.

"This new arrangement doesn't cancel out the previous deal, we are still trying to get procedures moving for that one," the source said.

The October deal, struck with a little known firm called Zernomir, has so far not been fulfilled and may never be, according to Syrian and Russian government sources.

One European trader was more optimistic the new deal with Syrian firms would be fulfilled.

"Two or three Syrian companies seem to have been awarded this volume and are trying to buy 11.5 percent protein wheat in the Russian market," he said.

"It is a surprise to hear they are trying to buy 1.2 million tonnes. They have been trying to disguise how much they need and buy spot supplies."

President Bashar al-Assad's government managed to collect only around 400,000 tonnes of the 1.3 million tonnes of wheat that the U.N. Food and Agriculture Organization estimated Syria produced last year.

The Syrian government source declined to give a figure to the country's strategic stock.

($1 = 515.0000 Syrian pounds)

(Reporting by Maha El Dahan; Additional reporting by Polina Devitt in Moscow and Michael Hogan in Hamburg; Writing by Gus Trompiz and Sybille de La Hamaide; Editing by Jane Merriman and David Evans)