Express | breaking! India bans wheat exports with immediate effect, adding fuel to soaring global fo
The Indian government announced an immediate ban on wheat exports Thursday evening in an effort to control rising commodity prices in the country's domestic market and ensure sufficient food supplies, CCTV news reported.
India's Directorate General of Foreign Trade issued a notice on Monday, saying the ban on wheat exports would be implemented with immediate effect. The circular also said that countries that have requested and obtained authorization from the Indian government to meet their food security needs will be able to continue to receive wheat exports from India.
India exports a record amount of wheat
But domestic prices are also rising
India is the world's second largest wheat producer, China Central Television (CCTV) reported Monday, citing Reuters. India's wheat exports hit a record high of 7.85 million tonnes in the 2021-2022 fiscal year ending in March, up 275 percent year-on-year, The Hindustan Times reported Thursday.
Russia and Ukraine are both big wheat exporters. Together, the two countries account for nearly 30 percent of global wheat exports, according to Reuters. The escalation of the conflict between Russia and Ukraine has tightened the global food supply chain and pushed up food prices. According to Reuters, India is the only major supplier of wheat at this time of year.
However, domestic wheat prices have been rising recently due to adverse weather and international markets. On the one hand, India was hit by unusually high temperatures in mid-March, which affected wheat production. The government has cut its wheat production forecast for this year to 105m tonnes, down 5.7 per cent from the figure made in February. On the other hand, private grain traders bought up wheat in anticipation of strong export demand. A combination of factors sent domestic wheat prices to their highest level in a decade in April, up 6.95 per cent from a year earlier.
High temperatures have the most direct impact on agricultural production, especially on wheat, as India's main wheat producing areas are in the critical grain-filling period in the middle and northwest of the country, where high temperatures persist, and local experts expect an average yield cut of 15 to 25 percent this year, reported China Business News.
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"We don't have a heat action plan. There is a gap in planning," he said. It's just a matter of getting used to it. The heat wave is testing the limits of human survival."
Where does India export wheat?
About 50 countries rely on Imports from Russia and Ukraine to secure 30 percent or more of their wheat supply, mostly in the least developed or low-income food-deficit countries in North Africa, Asia and the Near East, according to a report by the Food and Agriculture Organization of the United Nations, Financial Union reported. For these countries, the food security situation is particularly serious.
Earlier, External Affairs Minister Sushil Jaishankar said India could serve as an exporter of wheat to make up for the global shortage caused by the situation in Ukraine, according to reference sources, new Delhi, April 26, 2007.
"We are seeing one of the consequences of the conflict in Ukraine reflected in energy prices, food shortages and food inflation," he said at the Rishina Dialogue forum in New Delhi. India can change the situation by intervening in agricultural exports, especially wheat, "he said.
Buyers of Indian wheat are typically concentrated in South and Southeast Asia, the Middle East, Europe and North Africa. Egypt, the world's largest wheat importer, also started buying wheat from India for the first time last month as the conflict between Russia and Ukraine led to a sharp drop in supplies in eastern Europe. India has also started exporting wheat this year to other new markets such as Israel, Turkey, Indonesia, Mozambique and Tanzania, traders said.
India exported a record 1.4m tonnes of wheat in April, easing some of the tightness in the global grain market as buyers scrambled to find alternatives to crop supplies from the Black Sea hit hard by the conflict between Russia and Ukraine. There had even been expectations that exports could rise further this month as the new crop was harvested in April.
"Exports are likely to rise to 1.5m tonnes in May," said a New Delhi-based dealer for a global trading company. "Wheat supplies and railway carriages have improved in the past few weeks, which will help export more wheat in May." He says buyers from Asia and the Middle East are flocking to Buy Indian wheat because it is cheaper than wheat from other regions.
France, the United States are troubled by the weather
Global wheat production is expected to decline
Currently, the Ukraine crisis is affecting wheat supplies in the region, with France, the EU's most important wheat producer, suffering a drought and India experiencing its worst heat wave in a century, reported China Business News.
Global wheat production in 2020/23 is expected to be 774.8 million tonnes, 4.5 million tonnes lower than in 2020/22 and the first decline since 2018/19, according to the LATEST USDA Global Agricultural Supply and Demand report.
After Ukraine left a gap in wheat supplies, other countries were slow to fill the gap, with only a few, including Canada, increasing production, USDA said. It forecast that wheat production in the EU, India, Australia and Argentina would be 136m tonnes, 109m tonnes, 30m tonnes and 20m tonnes in 2020/23, all below last year's levels.
Zhang Zhixian, vice president of NetEase Research Institute of CoFCO, believes that wheat yield depends on weather in the short term and science and technology in the medium and long term. "At present, weather is the most important factor affecting wheat yield per unit area during the critical crop growth period." He said.
France, the European Union's most important wheat producer, is suffering a drought. Basile Faucheux, a French grain producer, said that in a worst-case scenario its wheat production would be cut by 30-50 per cent and could not be reversed later in the growing season. Groundwater has dried up in some parts of France, and the French government has imposed restrictions on water used for agriculture.
While the USDA forecasts 2020/2023 U.S. wheat production to be higher than last year, the U.S. has also been plagued by adverse weather.
"More than 68 percent of the winter wheat crop in the United States is in severe drought, and the states that grow spring wheat are struggling with too much moisture. In Minnesota, one of the nation's largest spring wheat growing states, spring wheat is now planted at 2 percent, compared with 93 percent a year ago. "If we don't see better weather, the yield and quality of both winter and spring wheat will suffer." The National Wheat Growers Association said recently.
The move comes as global wheat futures remain near record highs, with CBOT prices hitting an all-time high of $13.63 a bushel in March, surpassing the previous high set in 2008. Judging by the latest U.S. government forecasts, some analysts say the market is generally too optimistic about the wheat supply outlook and that the supply situation could get tougher.
As of May 14, wheat futures trend day K. Source: Oriental Fortune