International wheat prices jump as India bans export

India’s decision to ban export of wheat to contain local food inflation has resulted in international prices of the commodity going through the roof.

Ukraine and Russia are the world’s largest exporters of wheat, but the war has disrupted the supply chain, resulting in shortage and unexpected demand for wheat from India, which is the second largest producer in the world after China but is not a major exporter because of its high domestic demand.

After promising the world to help compensate for supply chain disruption caused due to Ukraine-Russia war, the Modi government recently did a U-turn on wheat export mainly because local food inflation surged to the highest level in eight years on the back of rising food prices. Besides, heatwave has impacted its wheat yield this season with the production down by almost 15%.

Listen: Podcast: ‘Govt shifting burden onto farmers with wheat export ban’

As the European markets opened on Monday (May 16), the per tonne price of wheat jumped to 435 euros ($453). The price hike was further fuelled by fertilizer shortage and decreasing yields across the world, increasing risk of social unrest in developing countries.

India has now said that it will honour deals signed before May 13, but won’t allow export thereafter unless it is for poorer countries that are finding it difficult to meet their food security needs.

Also read: Explained: The reason why India chose to ban wheat exports

India’s decision to abruptly halt export was criticised by the Group of Seven industrialised nations, which said that such measures would worsen the crisis.

Recently, the US Department of Agriculture said that global wheat production would fall for the first time in four years in 2022-23. Besides, the UN World Food Programme stated that the war in Ukraine had exposed the “fragility of global supply chains to sudden shocks, with serious consequences for food security”.