India has banned wheat exports, in a move that is likely to drive food prices higher and cause hunger in poor countries dependent on imports.
The Indian government said it was implementing the ban on overseas sales “to manage the overall food security of the country and support the needs of neighboring countries and other vulnerable countries”.
However, they say they will still allow exports for which letters of credit have been issued and that they will consider selling to countries looking to meet their food security needs.
Announcement, one of the latest announcements protective measures launched by food exporting countries after prices rose this year, after Indian government officials denied that they would stop wheat exports.
India has filled the export supply gap in international wheat markets left by Ukraine in the wake of Russia’s invasion, but concerns grow about export restrictions amid heat wave has been launched in this country since March.
The U-turn comes after Indian government data this week showed domestic inflation rose to an eight-year high, with soaring food prices alarming policymakers. .
Traders anticipate turbulent trading in the international wheat markets when they open early next week as the ban will be a blow to buyers looking for wheat supplies. “It was an absolute bomb,” said Swithun Still, a grain trader based in Switzerland. “There will be panic in the wheat futures markets when they open,” he added.
One of the world’s largest wheat producers, India enjoyed a strong harvest last year while several other key exporters including Canada and Argentina suffered from bad weather.
India’s wheat exports rose to a record high of more than 7 million tonnes in the year ending March due to war, except that exports from Ukraine have ceased to exist.
But intense heat in March and April, where temperatures hit 45 degrees Celsius affecting much of India’s wheat belt, has raised concerns about the country’s domestic supply. With the heat forecast for a few more weeks before the start of the annual monsoon next month, the government recently lowered its forecast for the current crop by 5% to 105 million tonnes for the full year through June.
Wheat prices are at a low level due to supply concerns due to the Ukraine war and drought around the world. United States Department of Agriculture forecast that global supply for next season will fall for the first time in four years. “The USDA has made it clear that we are heading towards a global food crisis,” said Carlos Mera, an analyst at Rabobank. “The next 12 months will be very difficult.”
Chicago wheat futures, the international benchmark, closed at $11,6725 per bushel, up 50 percent year-to-date while the European wheat futures market was at 410.75 euros per ton, only less than the record high in March.
India’s consumer price index in April rose 7.8% from a year earlier, the highest level since 2014, according to data released on Thursday.
Concern about the rapid rise in prices has spurred the Reserve Bank of India interest rate hike surprise this month, for the first time in four years.