Wheat prices surged to a new record high in European trading on May 16 after India decided to ban exports of the commodity as a heatwave hit production.
The price jumped to €438.25 ($456.68) per tonne as the Euronext market closed, breaking the previous closing record of 422.40 struck on March 7, according to trader Damien Vercambre at grains brokerage Inter-Courtage.
It had earlier set a record opening price of €435.
On the Chicago Board of Trade, wheat was trading nearly six per cent higher in midday trading at $12.48 per bushel.
Global wheat prices have soared 40 per cent on supply fears since Russia in February launched a military offensive against agricultural powerhouse Ukraine, which previously accounted for 12 per cent of global exports.
The spike, exacerbated by fertiliser shortages and poor harvests, has fuelled inflation globally and raised fears of famine and social unrest in poorer countries.
India, the world’s second-largest wheat producer, said on May 14 that it was banning exports after its hottest March on record, with traders needing express government approval to enter into new deals.
New Delhi said the move was needed to protect the food security of its own 1.4 billion people in the face of lower production and sharply higher global prices.
Some parts of India have seen prices in wheat and flour jump 20 to 40 per cent in recent weeks, commerce secretary BVR Subrahmanyam said on May 15.
Because of the sharp rise in global prices, some farmers were selling to traders and not to the government.
This got the government worried about its buffer stock of almost 20 million tonnes – depleted by the pandemic – needed for handouts to millions of poor families and to avert any possible famine.
“Contrary to Russia which has had an export quota and tax system in place for years, India no doubt has more difficulty in controlling exports,” said Inter-Courtage’s Vercambre.
The export ban drew sharp criticism from the Group of Seven (G7) industrialised nations, which said that such measures “would worsen the crisis” of rising commodity prices.
Export deals agreed before the directive issued on May 13 could still be honoured but future shipments needed government approval, it said.
However, exports could also take place if New Delhi approved requests from other governments “to meet their food security needs”.
India, which possesses major buffer stocks, previously said it was ready to help fill some of the supply shortages caused by the Ukraine conflict.
Only last week India said it would send delegations to Egypt, Turkey and elsewhere to discuss boosting wheat exports. It was unclear whether these visits will now go ahead.
India recorded its warmest March on record – blamed on climate change – and in recent weeks has seen a scorching heatwave with temperatures upwards of 45 degrees Celsius.
This hit farmers in wheat-producing northern India, prompting the government to predict output would fall at least five per cent this year from 109 million tonnes in 2021.
The downturn could not come at a worse time as Ukraine, which was in line to become the world’s number three wheat exporter, will see its output cut by a third due to the fighting there, according to forecasts by the US Department of Agriculture (USDA).
The USDA expects Ukraine to export around 10 million tonnes of wheat this year, down from 19 million tonnes last year. Dry weather in the US and western Europe has added to supply concerns.
