Wheat prices hit a record high in European trade after India banned exports due to scorching heatwave

Wheat prices hit a new high in European trading on Monday after India moved to ban exports of the staple as a heatwave hit production. The price jumped to 435 euros (Rs 35,260) per ton at the opening of the Euronext market, up from the previous high of 422 euros (Rs 34,180) reached on Friday.

At the Chicago Board of Trade, just before the market opened, the SRW wheat futures price reached $12.35 (Rs 961) a bushel, an increase of 4.9%. Global wheat prices have soared 40% on supply fears since Russia’s February invasion of agricultural powerhouse Ukraine, which previously accounted for 12% of global exports.

The spike, exacerbated by fertilizer shortages and crop failures, has fueled global inflation and raised fears of famine and social unrest in poorer countries. India, the world’s second-largest wheat producer, said on Saturday it was banning exports after its hottest March on record, with traders needing express government approval to strike new deals.

New Delhi said the move was necessary to protect the food security of its 1.4 billion people in the face of falling production and sharply rising world prices. Parts of India have seen wheat and flour prices jump 20-40% in recent weeks, BVR Commerce Secretary Subrahmanyam said on Sunday.

Due to the sharp rise in world prices, some farmers were selling to traders and not to the government. This has worried the government about its buffer stock of nearly 20 million tonnes – depleted by the pandemic – needed to distribute subsidies to millions of poor families and to avert any possible famine.

“Unlike Russia, which for years has had a system of export quotas and taxes in place, India is arguably finding it harder to control its exports,” said Damien Vercambre of the brokerage firm. in Inter-Courtage cereals.

The export ban drew strong criticism from the Group of Seven industrialized nations, which said such measures would “aggravate the crisis” of rising commodity prices.

“Deterioration of the crisis”

Export agreements made before the directive issued on May 13 could still be honored, but future shipments had to be approved by the government, he said. However, exports could also take place if New Delhi approves requests from other governments “to meet their food security needs”.

India, which has large buffer stocks, had previously declared itself ready to help fill some of the supply shortages caused by the war in Ukraine. Just last week, India announced it would send delegations to Egypt, Turkey and elsewhere to discuss increased wheat exports. It was not clear if these visits would now continue.

India recorded its hottest March on record – attributed to climate change – and in recent weeks has seen a scorching heatwave with temperatures above 45 degrees Celsius. It has hit farmers in wheat-producing northern India, prompting the government to forecast output will fall by at least 5% this year, from 109m tonnes in 2021.

The slowdown couldn’t have come at a worse time as Ukraine, which was on track to become the world’s third-largest wheat exporter, will see its production cut by a third due to fighting, according to forecasts from the US Department of Health. Agriculture.

The USDA expects Ukraine to export around 10 million tonnes of wheat this year, up from 19 million tonnes last year. Dry weather in the United States and Western Europe compounded supply issues.

(Written by Sofia Bouderbala)

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