India halted wheat exports with immediate effect on Saturday, just days after announcing that it aimed for record shipments this year due to a blistering heatwave that cut production and pushed local prices to an all-time high amid strong export demand.
Exports for letters of credit that have already been given, as well as requests from nations striving to “meet their food security demands,” will continue, according to the administration.
After Russia’s invasion of Ukraine in late February, shipments from the Black Sea area plummeted, global purchasers were counting on the world’s second-largest wheat producer for supply. India had planned to export a record 10 million tonnes this year before the restriction.
The Indian prohibition might push world costs to new highs, hurting poor Asian and African customers.
“The restriction is startling,” said a Mumbai-based global trading business dealer. “We expected export restrictions after 2-3 months, but it appears the government’s thinking has been altered by inflation data.”
In April, rising food and energy costs boosted India’s annual retail inflation to an eight-year high, bolstering economists’ belief that the central bank will need to hike interest rates more aggressively to keep prices in check.
Wheat prices in India have reached new highs, reaching as high as 25,000 rupees ($322.71) a tonne in some spot markets, compared to the government’s fixed minimum support price of 20,150 rupees.
India announced its record export target for the fiscal year 2022/23, which began on April 1, and said it will send trade delegations to countries including Morocco, Tunisia, Indonesia, and the Philippines to look for methods to expand shipments even more.
However, a rapid and unexpected spike in temperatures in mid-March implies the crop size might be smaller than predicted, at approximately 100 million tonnes or even lower, according to a New Delhi-based dealer with a global trading business, compared to a government estimate of 111.32 million tonnes.
“The government’s procurement has dropped by more than half. Spot markets are receiving considerably less supply this year than previous. All of this points to a smaller harvest “explained the dealer
India exported a record 1.4 million tonnes of wheat in April, and contracts have already been inked for about 1.5 million tonnes in May.
“The prohibition in India would raise world wheat prices. There is currently no major provider on the market “explained the second dealer.