India banned wheat exports with immediate effect on Saturday, just days after it said it was targeting record shipments this year as a scorching heat wave slashed production and local prices hit record highs amid strong export demand.
The government said it would still allow the export of letters of credit already issued and at the request of countries trying to “meet their food security needs”.
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Global buyers counted on the world’s second-largest wheat producer for deliveries after Black Sea exports plummeted following Russia’s invasion of Ukraine in late February. Prior to the ban, India aimed to ship a record 10 million tons this year.
The Indian ban could push world prices to new peaks and hit poor consumers in Asia and Africa.
“The ban is shocking,” said a Mumbai-based dealer at a global trading company. “We expected export restrictions after 2-3 months, but it seems that the inflation figures have changed the government’s mind.”
Rising food and energy prices pushed annual retail inflation in India to an eight-year high in April, reinforcing economists’ belief that the central bank would need to raise interest rates more aggressively to rein in prices.
Wheat prices in India have soared to record highs, reaching as high as 25,000 rupees ($322.71) per tonne in some spot markets, against a government-set minimum support price of 20,150 rupees.
Lower crop size
Earlier this week, India outlined its record export target for fiscal year 2022/23 starting April 1, adding that it would send trade delegations to countries such as Morocco, Tunisia, Indonesia and the Philippines to explore ways to further expand shipments. stimulate.
But a sharp and sudden rise in temperature in mid-March means the harvest could be smaller than expected, around 100 million tons or even lower, a New Delhi-based dealer with a global trading company said, against a government estimate for a whole – time high of 111.32 million tons.
“Government procurement has fallen by more than 50 percent. Spot markets are getting much less supply than last year. All these things point to a lower harvest,” the dealer said.
In April, India exported a record 1.4 million tons of wheat and agreements were already signed in May to export about 1.5 million tons.
“The Indian ban will cause global wheat prices to rise. At the moment there is no major supplier on the market,” said the second dealer.
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