Wheat rises the most in three weeks as India weighs export restrictions

Wheat has gained the most in more than three weeks as India considers curbing shipments of the crucial grain, a move that would put further pressure on supplies at a time when the world is increasingly jittery amid a spreading food crisis.

Senior Indian officials plan to recommend the export restrictions to Prime Minister Narendra Modi, who will then make the decision, according to a person with knowledge of the matter, who asked not to be identified because the information is private. Indian Food Minister Sudhanshu Pandey said at a briefing that there was no need to limit exports for the time being as the country has enough reserves to meet domestic demand.

The global grain trade was turned upside down after the Russian invasion choked off most exports from Ukraine, a critical supplier of staples like wheat, corn and sunflower oil. India, which has traditionally not been a major exporter as high government grain prices kept its grain domestic, has exported more as major importers look elsewhere for their needs. Major buyers, including Egypt, recently approved access for Indian wheat.

The disruptions in grain flow, combined with fertilizer shortages and inclement weather in key growing areas, increase the risk of serious food shortages. Rising crop prices have already pushed global food costs to record highs, fueling inflationary pressures and hunger around the world.

Read more: India mulls wheat export restrictions amid recent food shortages

Chicago wheat futures for delivery in July rose as much as 4.2% before trading 3% higher on the day at $10.765 a bushel, its biggest rise since April 8. Milling wheat in Paris also rose.

“India had one of the few remaining significant wheat supplies to replace Ukrainian and possibly Russian supplies,” said Scott Irwin, an agricultural economist at the University of Illinois. “Today’s sharp jump in price is all you need to know about the significance of this potential move by India.”

Governments are scrambling to protect supplies and depress domestic prices. Leading palm oil supplier Indonesia banned its sale late last month, sending vegetable oil prices skyrocketing. Countries from Serbia to Kazakhstan have also restricted grain shipments. Now India is considering restricting wheat exports as severe heatwaves have damaged the crop, prompting the government to prioritize domestic consumption over global grain supplies.

India’s food ministry on Wednesday lowered its estimate for wheat production this season to 105 million tons. That’s down from a record 111 million tonnes previously forecast and 109.6 million tonnes produced a year earlier. According to US government estimates, the country is the third largest producer behind China and the EU and the eighth largest exporter.

However, severe heatwaves this spring have damaged local crops and the Food Ministry today slashed its harvest outlook by about 6 million tonnes.

Bloomberg