By Swann Collins, investor, writer and consultant in international affairs – Eurasia Business News, May 16, 2022

Wheat prices in Europe has reached another historical maximum due to statements by the Indian authorities about restrictions on grain exports. The price jumped to 435 euros per ton at the opening of Euronext, the previous record of 422 euros was reached at the auction on Friday.

Wheat prices are also rising on the Chicago Mercantile Exchange – here they reached a new high in two months. At the auction on May 16, wheat futures rose by 5.9% to $ 12.47 per bushel. Prices in the United States approached historical highs, to which the cost of wheat rose in early March due to fears of supply disruptions after the start of a special operation in Ukraine.

On May 13, the Indian authorities announced that they would partially restrict wheat exports. The ban applies to new contracts, but exports will still be allowed to countries that need wheat for food security. Food Minister Sudhanshu Pandey explained that the authorities imposed the ban to protect local consumers, as wheat prices in the country have risen strongly.

Earlier, India planned to make up for the shortage of wheat in the market, formed due to a special operation in Ukraine, sending a record volume of raw materials for export. But part of the Indian harvest was affected by the intense heat that hit the country in April and May.

In the fiscal year ended March, India increased its wheat exports to 7.85 million tonnes, up from 2.1 million tonnes in the previous year. This year, the country planned to export 10 million tons of wheat and increase it to 15 million tons if weather conditions remained favorable.

Experts warned that any statements about restricting exports from India would lead to a strong increase in commodity prices.

India is one of the largest wheat producers in the world, but most of the production is directed to the domestic market. Several media sources earlier reported that the country plans to become the world’s leading exporter after Russia’s military operation in Ukraine and its consequences on the wheat market.

India’s harvest was set to reach record highs and Prime Minister Narendra Modi promised to “feed the world” by selling wheat to countries dependent on Ukrainian and Russian grain.

Read also : Wheat Prices Soar at $396 per ton

But this was without counting on global warming: the historic heat wave in March has ravaged the Indian wheat fields and should drop the harvest by more than 4% compared to last year, according to estimates. This deficit comes at a time when annual inflation of food prices in the United States have hit 10% in April.

Read also : Wheat Prices Rise Again, Amid War in Eastern Europe

The Indian government wants to keep Indian wheat for domestic consumption. Authorities decided to prohibit any further private exports, but reserves the right to sell it to countries that are in essential need.

Blockade of Russian and Ukrainian exports because of the war and climate change also explain the soaring wheat prices.

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© Copyright 2022 – Swann Collins, investor, writer and consultant in international affairs.