International wheat prices rose by almost 6 per cent a bushel (60 pounds or one million kernels or 27.21 kg) when global markets opened Monday, as India announced a surprise export ban.
Prices dropped by 4-8 per cent in the Indian markets.
Global wheat prices have jumped over 60 per cent in 2022, as Russia and Ukraine together account for almost a third of world wheat exports and the ongoing conflict has all but put paid to that.
According to the Indian government’s Department of Commerce, India exported 66.41 lakh tonnes of wheat in the first 11 months (April 2021 to February 2022) of FY2021-22.
The Group of Seven (G-7) expressed disappointment with India’s decision. After a meeting of G-7 agriculture ministers in Germany, German Agriculture Minister Cem Ozdemir said the export restriction would ‘worsen the crisis.’
‘If everyone starts to impose export restrictions or to close markets, that would worsen the crisis,’ Ozdemir said at a press conference in Stuttgart on Saturday.
India defended its decision, saying the ban was ‘essentially in view of the price rise’, according to Union Food Secretary Sudhanshu Pandey.
India has been reeling from soaring inflation post the pandemic, at about 7.79 per cent, much higher than the upper band of RBI inflation target of 6 per cent.
Experts noted the impact of India’s export ban would be felt disproportionately especially in its neighboring Asian countries. According to a Nomura report, a large part of Asia depends on Indian wheat exports for domestic consumption and will be indirectly impacted by higher global prices, even if they do not directly import from India.
Bangladesh was the biggest buyer of Indian wheat, importing 38.04 lakh tonnes in 2021-22. Sri Lanka (5.48 lakh tonnes), UAE (4.24 lakh tonnes), Indonesia (3.66 lakh tonnes), the Philippines (3.52 lakh tonnes) and Nepal (2.90 lakh tonnes) were the other big importers of Indian wheat.
Nomura
Commerce Secretary BVR Subrahmanyam said the ban serves three purposes, maintaining the country’s food security, helping those in distress, if countries make a specific request, and India’s reliability as a supplier being maintained.
‘So, if we say that roughly 1.6 or 1.7 million tonnes has gone out, we are still prepared to allow another 2.5 million (tonnes) to go if there are prior book valid orders with a letter of credit,] he said at the media briefing on Saturday.
Stay updated with all the insights.
Navigate news, 1 email day.
Subscribe to Qrius
