Wheat price soars after India bans exports fuelling global crisis

THE price of wheat has jumped after India banned exports of the grain, drawing criticism from G7 ministers that it will make the global food crisis worse.

India is the world’s second-biggest producer and its wheat has been in high demand after exports from the Black Sea region dwindled amid the war in Ukraine. Russia and Ukraine jointly account for around a third of global wheat exports. Ukraine’s trade has been severely hampered by the closure of its ports, while Russia’s exports have been hit by Western sanctions.

Benchmark wheat futures in Chicago jumped by their 6pc limit yesterday as markets reacted to the surprise ban, which came just days after New Delhi said it was targeting record wheat shipments of 10m tonnes this year.

The government made the U-turn after a heatwave cut harvest prospects and pushed domestic prices to a record high. The policy reversal means only exports backed by payment guarantees issued before May 13 can go ahead. This amounts to only about 400,000 tonnes, industry sources said, while 1.8m tonnes are now trapped in Indian ports.

Traders holding the wheat face losses because they will have to cancel their export deals and resell on to the domestic market, which is not as lucrative.

A Europe-based trader said: “Asian importers are likely to be in deep trouble. India was the Ukraine/russia alternative especially for feed wheat. [They are] already today casting around for alternatives.” He said importers in Asia were even looking to buy more Russian wheat despite sanctions and higher shipping insurance premiums.

The ban could drive global prices to new record peaks, hitting poor consumers in Asia and Africa hard. Top destinations for Indian exports include Bangladesh, Indonesia, Nepal and Turkey, while Egypt, a key importer, recently agreed to make a first ever purchase of Indian wheat.

Carlos Mera, agri commodities analyst at Rabobank, said: “There’s uncertainty over how much will be exported to countries India considers having food security needs.

“They might just export to friendly neighbouring countries.”