PARIS — Wheat prices surged to a new record high in European
trading on Monday after India decided to ban exports of the commodity as a heat
wave hit production.
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The price jumped to 435 euros ($453) per tonne as
the Euronext market opened, up from the previous record of 422 euros reached on
Friday.
On the Chicago Board of Trade, just before trading
opened the price of the SRW wheat futures contract hit $12.35 a bushel, an
increase of 4.9 percent.
Global wheat prices have soared 40 percent on supply
fears since Russia’s February invasion of agricultural powerhouse Ukraine,
which previously accounted for 12 percent of global exports.
The spike, exacerbated by fertilizer 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 Saturday 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 percent in recent weeks, Commerce Secretary BVR
Subrahmanyam said on Sunday.
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 Damien Vercambre at grains brokerage Inter-Courtage.
The export ban drew sharp criticism from the Group
of Seven industrialized nations, which said that such measures “would worsen
the crisis” of rising commodity prices.
‘Worsen the crisis’
Export deals agreed before
the directive issued on May 13 could still be honored 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 war.
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 heat wave with
temperatures upwards of 45 degrees Celsius (113 Fahrenheit).
This hit farmers in wheat-producing northern India,
prompting the government to predict output would fall at least five percent
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.
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.
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