May 16, 2022
India bans exports of wheat as heat wave affects output
The Indian government has imposed a ban on wheat exports from the country days after it expected to reach record shipments in 2022, following a heat wave that is affecting grain output and resulting in soaring domestic prices for wheat, Reuters reported.
The government said exports will be permitted if it is supported by already issued letters of credit. Exports will also be allowed to nations that request supplies to meet food security needs.
Senior government officials said the export ban could be revised.
Buyers from around the world were relying on supplies from India, the second biggest wheat producer in the world, after exports from the Black Sea region were disrupted following Russia's invasion into Ukraine.
Before the imposed ban, India expected to export 10 million tonnes of grain in 2022.
Government officials said there was no significant decline to wheat production, but unregulated exports have resulted in soaring domestic prices.
A Mumbai-based dealer with a global trading firm said they were expecting restrictions on exports after two to three months, but inflation may have pushed the government to impose a ban.
India's annual retail inflation has increased to an eight-year high in April due to increasing food and energy prices.
Indian wheat prices in some spot markets have reached INR 25,000 (~US$320; INR 10 = US$0.13) per tonne, a record high and above the government's minimum support price of IDR 20,150 (~US$258.63) per tonne.
In February, the Indian government projected wheat output at 111.32 million tonnes, the sixth straight record crop. But they slashed the projection to 105 million tonnes this month.
A New Delhi-based dealer with a global trading firm said output is expected around 100 million tonnes or lower because of the heat wave.
India shipped a record 7 million tonnes of wheat in the fiscal year to March, 250% higher compared to the year prior.
The state-run Food Corporation of India (FCI) has purchased just over 19 million tonnes of wheat from local farmers, compared to last year's total purchases of 43.34 million tonnes. FCI buys grains to operate a food welfare programme for poor citizens.
Indian farmers usually sell to FCI but this year have opted to sell grains to private traders as they offered higher prices.
India exported a record 1.4 million tonnes of wheat in April, and contracts have already been inked for about 1.5 million tonnes in May.
Another trader said the ban in India would increase worldwide wheat prices as there are no major suppliers in the market.