India bans wheat exports with immediate effect
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India is the second largest wheat exporter in the world and has imposed a ban on all grain exports immediately.
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India wheatExports went into immediate effect Saturday after the company announced it would be targeting record-setting shipments in this year’s fiscal year. This was just days after declaring that they were targeting record shipments. The scorching heatwave had reduced output, and local prices reached an all time high due to strong export demand.
It said that it will still permit exports of letters-of credit already issued, and at the request of countries trying to “satisfy their food security needs,”
After the Russian invasion of Ukraine in February, global buyers began to rely on India as the second largest wheat producer. India had previously set a new record of 10 million tonnes for this year, prior to the ban.
Global prices could rise to new heights due to the Indian ban. This would also impact poor customers in Asia and Africa.
According to a Mumbai dealer working for a global trading platform, “The ban on exports is quite shocking.” We expected curbs on exports within 2-3 months. But it seems that inflation has changed the government’s mind.
India’s inflation rate in retail was pushed up to eight years high by rising energy and food prices. Economists believe that India’s central bank will need to hike interest rates to lower prices.
Indian wheat prices have reached a record high. Some spot markets are seeing wheat prices as high as $2322.71 per tonne. This is in contrast to the government’s minimum support price, which was 20,150 rupees.
A heat wave causes crop shrinkage
India announced earlier this week that it had set a record for exports in the fiscal year 2022/23, which began on April 1. It also stated that trade delegations would be sent to Indonesia, Morocco, Tunisia and Indonesia to investigate ways of increasing shipments.
However, sharp and sudden rise in temperaturesThe crop could shrink to around 100m tonnes by mid-March, according to New Delhi’s dealer in global trading. That is in comparison with the government estimate of an all-time high at 111.32m tonnes.
“The government’s purchasing has dropped more than 50%. Spot markets see a drop in supplies compared to last year. These are all indicators of a lower crop,” said the dealer.
India exported record-breaking 1.4 Million tonnes of wheat in April. Deals were also signed for exports to India around 1.5million tonnes by May.
The ban by India will boost global wheat prices. The second dealer stated that there was no major supplier on the market right now.
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