The move by India to restrict wheat exports is going to reverberate through global agricultural markets, exposing how tight global supplies are after the war in Ukraine and threatening to cause food prices to go up even more.
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None India Bans Wheat Exports as Food Security Comes Under Threat Food Security Comes Under Threat
The government said in a notice on May 13 that it will suspend overseas sales to manage its food security. This drew criticism from the Agriculture Ministers of the Group of Seven nations who said such measures make the world's crisis worse.
India isn't even a major exporter on the world stage. The fact that it could have such a major impact underscores the bleak prospect for global wheat supplies. The war has crippled Ukraine s exports, and now droughts, floods and heat waves threaten crops in most major producers.
Andrew Whitelaw, a grains analyst at Melbourne-based Thomas Elder Markets, said if this ban happened in a normal year, the impact would be minimal but the loss of Ukraine volumes exacerbated the issues.
India halts wheat exports after a record-breaking heat wave parched the crop during a crucial period, spurring estimates of slumping yields. India tried to fill the gap as the shortfall in Ukraine's exports pushes buyers towards alternative origins, as a result of the output risk.
India prioritized the domestic market even though the move risks tarnishing its international image as a reliable supplier. Prime Minister Narendra Modi faces frustration on home soil about surging inflation, an issue that brought down the previous government and paved the way for his ascension to power.
India will approve exports to countries that require wheat for food security needs and based on the requests of their governments. It will allow shipments for which irrevocable letters of credit have already been issued. The food ministry of India said that by directing wheat exports through government channels, they would not only ensure the genuine needs of our neighbours and food-deficit countries, but also control inflationary expectations. It said the country has adequate food stocks.
The policy is frustrated with traders. The government sent trade delegations to countries in Africa, Asia and the Middle East to look at the possibility of boosting wheat exports a day before the export halt was announced. Food ministry said it saw no need to control exports, and that authorities were considering the move, according to Bloomberg News.
Vijay Iyengar, chairman and managing director of Singapore-based Agrocorp International, said a lot of exporters and actual users worldwide have commitments to purchase Indian wheat.
When the agricultural markets reopen on Monday, the ban could spark frenzied trading. In the last week, Benchmark wheat prices in Chicago went up 6.2%, while Paris wheat futures surged to an all-time high on concerns that extreme weather is pushing the global harvest. None of Starbucks Baristas Are Unionizing, and Even Howard Schultz Can't Make Them Stop?
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