India declared a wheat export ban on Friday last week, after a devastating heatwave decimated grain production in the world’s second-largest wheat producing country.
The benchmark wheat index increased 5.9% in Chicago, representing a two-month high for the commodity.
The price of the grain has soared 40% year-to-date, as the combined impact of the war in Ukraine and India’s plummeting wheat harvest sent the price into the stratosphere.
The Indian administration commented that it would allow exports backed by letter of credit that were already issued, as well as to nations that submitted requests on the basis of “food security needs.”
The price rise has had a knock-on effect on the cost of noodles, cakes, bread and other wheat-based foodstuffs across the market.
The ban was issued in a bid to stop domestic prices from soaring, however the move has been condemned by agriculture ministers at the G7 meeting in Germany.
“If everyone starts to impose export restrictions or to close markets, that would worsen the crisis,” said German agriculture minister Cem Ozdemir.
“We call on India to assume its responsibility as a G20 member.”
India previously stated a target export level of 10 million tonnes of wheat between 2022-2023, however the weather damage put its plans on hold, particularly as the country’s well-stocked wheat reserves faced massive rates of depletion as its distribution of free grain to 800 citizens during Covid-19 ate into its stores.
Meanwhile, Putin’s war in Ukraine has seen Russia impose a blockade on Ukraine grain exports in the so-called “breadbasket of Europe”, with the region collectively producing almost 30% of the global wheat supply.
The crippled grain supply from Ukraine, Russia and India is set to see a fresh frontier of food insecurity hit the supply chain, as UK consumers brace for 10% inflation in October and for rising food prices to bite chunks out of their wallets going forward in 2022.
