Wheat futures surged as India considers restricting exports at a time when importers are increasingly focused on the country’s ability to fill supply gaps created by the war in Ukraine.
The global food trade has been upended after Russia’s invasion closed off most exports from Ukraine — a critical supplier of staples like wheat, corn and sunflower oil. The disruptions, combined with a fertilizer shortage and bad weather in key crop regions, are raising the threat of a severe global food crisis. Rising crop prices have already sent global food costs soaring to a record, adding to inflationary pressures and raising hunger levels around the world.
Governments are now moving to protect supplies and push down domestic prices. Top palm-oil supplier Indonesia banned sales late last month, sending vegetable oil prices surging. Countries from Serbia to Kazakhstan have also restricted grain shipments. Now, India is considering restricting wheat exports as severe heat waves have damaged crops, prompting the government to prioritize domestic consumption over supplying the grain to the world.
India historically hasn’t been a major wheat exporter, as high government crop prices kept its grain at home. However, that’s been changing in the past year and gained pace as the war in Ukraine redraws the global grains trade, forcing big importers who traditionally relied on low-cost supplies from the Black Sea region to search elsewhere for their needs. Major buyers including Egypt have recently approved access for Indian grain.
However, severe heat waves this spring damaged local crops, with its food ministry today cutting its harvest outlook by about 6 million tons.
Wheat futures in Chicago rose as much as 3.9% to $10.8575 per bushel. That follows a five session slump and puts prices about 40% higher on the year. Milling wheat in Paris also gained about 2.5%.
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