New Delhi
Wheat jumped by the exchange limit to near a record high after India’s move to restrict exports, exposing just how tight global supplies are during the war in Ukraine and threatening to drive up food prices even more.
The government will suspend overseas sales to manage its food security, according to a notification dated May 13. This drew criticism from the agriculture ministers of the Group of Seven nations, who said that such measures make the world’s crisis worse.
Benchmark futures in Chicago rose as much as 5.9% to $12.475 a bushel, the highest in two months and within about $1 of the all-time high set just after Russia’s invasion. Prices have surged around 60% this year, increasing the cost of everything from bread to cakes and noodles. In Paris, milling-wheat rose 5.1% to 431.75 euros ($450) per ton, a record for most-active futures.
The surprising thing is that India isn’t even a prominent exporter on the world stage. The fact that it could have such a major impact underscores the bleak prospect for global wheat supplies. War has crippled Ukraine’s exports, and now droughts, floods and heat waves threaten crops in most major producers.
India’s decision to halt wheat exports came after a record-breaking heat wave parched the crop during a crucial period, spurring estimates of slumping yields. The output risk created a dilemma for India, which has tried to fill the gap as the shortfall in Ukraine’s exports push buyers toward alternative origins.
India prioritized the domestic market, even as the move risks tarnishing its international image as a reliable supplier. Prime Minister Narendra Modi faces frustration on home soil about surging inflation, an issue that brought down the previous government and paved the way for his ascension to power.
