Wheat prices hit record high after Indian export ban

Wheat prices soared to a new high in European trading on Monday after India opted to halt exports due to a heat wave that harmed output.

As the Euronext market started, the price soared to 435 euros ($453) per tonne, breaking the previous high of 422 euros set on Friday.

Since Russia’s February invasion of agricultural powerhouse Ukraine, which previously accounted for 12% of global exports, global wheat prices have risen due to supply concerns.
The increase has fueled global inflation and generated fears of hunger and social upheaval in poorer countries, which has been worsened by fertiliser shortages and bad crops.

After the hottest March on record, India, the world’s second-largest wheat producer, announced on Saturday that it was barring exports, with traders needing special government authorisation to enter into new deals.

In the face of decreased production and dramatically higher world prices, New Delhi said the measure was necessary to defend the food security of its own 1.4 billion people.

Wheat and flour prices have risen 20 to 40 percent in some parts of India in recent weeks, according to Commerce Secretary BVR Subrahmanyam.

Some farmers were selling to traders rather than the government due to the sharp surge in world prices.

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The government became concerned about its buffer stock of about 20 million tonnes, which had been reduced by the pandemic and was needed for handouts to millions of poor families and to avert starvation.

‘Worsen the situation’

Export agreements made before the May 13 decision may still be honoured, but future shipments would require government clearance, it said.

Exports could go happen, though, provided New Delhi approves requests from other nations to “meet their food security demands.”

India, which has large buffer supplies, has already stated that it is willing to assist in alleviating some of the supply shortages caused by the Ukraine conflict.

India recently announced that it would send delegations to Egypt, Turkey, and other countries to discuss increasing wheat exports. It was unclear whether the visits would take place presently.

The Group of Seven developed nations slammed the export prohibition, claiming that such steps would “worsen the crisis” of rising commodity prices.

India had its warmest March on record in March, owing to climate change, and has been experiencing a searing heatwave with temperatures reaching 45 degrees Celsius in recent weeks (113 Fahrenheit).

This impacted wheat growers in northern India, forcing the government to estimate a 5% drop in output this year from 109 million tonnes in 2021.