Global Wheat Prices Reach Record High As India Places A Ban On Its Export
Global wheat prices hit a 6% record on Monday after India decided on restricting overseas sales of wheat, exacerbating a food crisis. The world had been depending on India for alleviating wheat supplies crimped by the war in Ukraine.
India, the world’s second-largest wheat grower, 13 May declared that it would be banning private exports as it was focusing on managing its food security currently “at-risk”, but left a window for limited overseas shipments on request of a foreign government to satisfy food-security needs.
India’s decision to ban overseas sales will be impacting a global food shortage and may raise prices, even more, analysts observed.
Per a report from the Financial Times, wheat futures traded in the Chicago Board of Trade, a global benchmark, increased 5.9% to $12.47 a bushel (about 27 kg), hitting a two-month high, while the overall rates of the staple have increased over 60% in 2022 owing to the Ukraine war. Ukraine and Russia account for nearly one-third of the world’s wheat exports.
In Europe, the price of wheat has increased and touched a new high on Monday, hitting 435 euros per tonne at the benchmark Euronext market on Friday, up from the earlier record of 422 euros, an AFP report mentioned.
India was expecting to export significant quantities as the government, in February, had forecast an outstanding output of 111 million tonnes of wheat. A heat wave in the middle of March shriveled this winter staple, compelling the government to bring down production estimates by 5.7% to 105 million tonnes.
The decision seemed to be raising hackles with G7 countries that appear to criticize India’s decision in a statement on Saturday.
India exported 7.85 million tonnes in the last financial year to March. It recorded an increase of 275% from the earlier year. Before the export ban had started, the country had contracted for exporting 4.5 million tonnes as the government wanted to multiply overseas sales.
The sales are expected to go through formalities, like letters of credit, which have been issued, per the Indian government’s notification on curbing export. In April, the Indian traders have been able to sell 1.4 million tonnes overseas, taking the benefits of high demand as well as prices globally.