India is allowing “some relaxation” of its order restricting wheat exports to allow traders to meet prior commitments, according to the trade ministry. Futures fell as much as 3.8% in Chicago before paring losses.

Wheat consignments that have been handed over to customs for examination, and registered in their systems on or before May 13, will be cleared for export, the ministry said in a statement. The government has also given the green light for a 61,500-ton shipment to sail from Kandla port to Egypt following a request from that government, it said.

India, in a government order dated May 13, restricted wheat exports to avoid a domestic supply squeeze. In the notification, it made exceptions only for prior commitments made by private traders through irrevocable letters of credit, and for exports to countries that require wheat for food security needs, based on the requests of their governments. Shipments were curbed after record heat slashed production and drove up domestic prices. 

Traders have contracted to export 4.5 million tons so far in 2022-23, according to the food ministry. As well as Egypt, Turkey has also given approval to import wheat from India, it said. When the war in Ukraine throttled supplies from the Black Sea region, a top producer, India tried to fill the vacuum, and targeted record exports of 10 million tons. But that was before the curbs. 

The decision to halt wheat exports highlighted domestic concerns about high inflation, and added to a growing wave of food protectionism worldwide caused by rocketing crop prices. Indonesia has banned palm oil exports, while Serbia and Kazakhstan imposed quotas on grain shipments.

Benchmark futures in Chicago were down 1.9% at $12.24 a bushel by 11:38 a.m. London time, after touching a low of $12.0075. Prices earlier had climbed to a two-month high of $12.75. Futures have surged about 60% this year, increasing the cost of everything from bread to cakes and noodles.