India bans wheat exports with immediate effect – News

Food security is at risk, according to the country



Reuters file

By Reuters

Published: Sat 14 May 2022, 09:16

Last update: Sat 14 May 2022, 11:02

India banned wheat exports on Saturday, just days after saying it was aiming for record shipments this year, as a scorching heat wave slashed output and domestic prices hit a record high.

The government said it would still allow exports backed by letters of credit already issued and to countries that request supplies “to meet their food security needs”.

Global buyers were banking on supplies from the world’s second-largest wheat producer after exports from the Black Sea region plummeted following Russia’s invasion of Ukraine in late February. Before the ban, India was aiming to ship a record 10 million tonnes this year.

The ban could push global prices to new highs and hurt poor consumers in Asia and Africa.

“The ban is shocking,” said a Mumbai-based dealer with a global trading company. “We were expecting export restrictions after two to three months, but it seems the inflation figures have changed the government’s mind.”

Rising food and energy prices pushed India’s annual retail price inflation to an eight-year high in April, bolstering economists’ view that the central bank should raise interest rates. interest more aggressively to rein in prices.

Wheat prices in India hit a record high, in some spot markets up to 25,000 rupees ($322.71) a tonne, against a minimum support price set by the government at 20,150 rupees.

LOWER CROP SIZE

Earlier this week, India outlined its record export target for the 2022/23 financial year which started on April 1, adding that it would send trade delegations to countries such as Morocco, Tunisia, India and India. Indonesia and the Philippines to explore ways to further increase shipments.

But a sharp and sudden rise in temperatures in mid-March means the crop size could be smaller than expected at around 100 million tonnes or even less, said a New Delhi-based dealer with a global trading company. The government had estimated that production would reach a record level of 111.32 million tonnes.

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“Government purchases have fallen by more than 50%. Spot markets are receiving much lower supplies than last year. All of these things point to a lower harvest,” the dealership said.

Benefiting from a rise in world wheat prices following Russia’s invasion of Ukraine, India exported a record 7 million tonnes of wheat in the fiscal year ended March, up more than 250% over the previous year.

“Wheat price rise has been rather subdued and Indian prices are still significantly lower than world prices,” said Rajesh Paharia Jain, a New Delhi-based trader.

“In fact, wheat prices in some parts of the country reached their current level even last year, so the decision to ban exports is nothing more than a knee-jerk reaction,” he said. he added.

In April, India exported a record 1.4 million tonnes of wheat and agreements have already been signed to export around 1.5 million tonnes in May.

“The Indian ban will drive up global wheat prices. Currently, there is no big supplier in the market,” said another dealer.

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