Wheat gained the most in more than three weeks as India considers restricting shipments of the crucial grain, a move that would further pressure supplies at a time when the world is increasingly nervous about an unfolding food crisis.
Senior Indian officials plan to recommend the export limits to Prime Minister Narendra Modi, who will then make the decision, according to a person with knowledge of the matter, who asked not to be identified as the information is private. Indian Food Secretary Sudhanshu Pandey said at a briefing that there’s no need to curb exports for now as the country has enough supply to meet domestic demand.
Global grain trading has been upended after Russia’s invasion choked off most exports from Ukraine, a critical supplier of staples like wheat, corn and sunflower oil. India, which traditionally hasn’t been a major exporter as high government crop prices kept its grain at home, has shipped out more as big importers search elsewhere for their needs. Major buyers including Egypt have recently approved access for Indian wheat.
The grain flow disruptions, combined with a fertilizer shortage and bad weather in key crop regions, are raising the threat of severe food shortages. Rising crop prices have already sent global food costs soaring to a record, adding to inflationary pressures and raising hunger levels around the world.
Chicago wheat futures for July delivery jumped as much as 4.2% before settling the day up 3% higher at $10.765 a bushel, the biggest increase since April 8. Milling wheat in Paris also rose.
“India had one of the few remaining significant stocks of wheat available to replace Ukrainian, and possibly Russian, supplies,” said Scott Irwin, an agricultural economist at the University of Illinois. “The sharp jump in prices today is all you need to know about the importance of this possible move by India.”
Governments are moving to protect supplies and push down domestic prices. Top palm-oil supplier Indonesia banned sales late last month, sending vegetable oil prices surging. Countries from Serbia to Kazakhstan have also restricted grain shipments. Now, India is considering restricting wheat exports as severe heat waves have damaged crops, prompting the government to prioritize domestic consumption over supplying the grain to the world.
India’s food ministry on Wednesday slashed its estimate for wheat output this season to 105 million tons. That’s down from a record 111 million tons forecast previously and 109.6 million tons produced a year earlier. The nation is the third-biggest grower behind China and the EU and the eighth-biggest exporter, according to U.S. government estimates.
However, severe heat waves this spring damaged local crops, with its food ministry today cutting its harvest outlook by about 6 million tons.