The price of wheat registered this Monday a rise of 5.94% in the Chicago Market, the main international reference for grain prices, due to the decision of the Indian government to close cereal exports.
The ton of wheat in Chicago climbed to US $ 458.39 dIt is from US$ 432.67 on Friday, May 13, after knowing this weekend the resolution of the Directorate General of Commerce of India to ban “with immediate effect” for reasons of “food security”.
India is the world’s second largest producer of wheat and the eighth largest exporter. after Russia, the European Union, Australia, Canada, the United States, Argentina and Ukraine, according to reports from the United States Department of Agriculture (USDA).
On Thursday, the Indian Ministry of Commerce had stated the objective of reaching this year wheat exports by 10 million tonswhich would have been the historical maximum for the country if it had not announced the closing of foreign sales the following day.
The decision was made at a time when The Asian country is affected by an intense heat wave that in some regions reached 47 degrees Celsius and could affect the productivity of the wheat harvest and other crops.
The Indian measure adds more disturbances to the grain market, after the price rebound generated from the invasion of Russia in Ukraine, which took the price of wheat in Chicago from $310.77 on February 25 to record $495.31 on March 7, 59.4% in just over a week. Since then, the price fluctuated around US$400 per ton, until Monday’s rise.
The closure of exports was rejected by the countries that make up the G7, whose agriculture ministers met this Saturday in Germany and assured that India’s position will aggravate the grain supply crisis that began with the Russian-Ukrainian conflict.
In addition to Germany, the G7 includes Canada, the United States, France, Italy, Japan and the United Kingdom.
After the initial announcement, which shocked the international agricultural market, Indian authorities admitted they could continue exports to food deficit countries and that private companies will be allowed to comply with commercial commitments until next July.
India’s General Directorate of Commerce indicated that the closure of wheat exports applies “with immediate effect” and that only those who have issued “an irrevocable letter of credit” will be exempted from it.
India exported 7 million tons in the 2021/2022 campaign, with a production of 107 million tons.
Among the main export destinations are neighboring countries such as Bangladesh, Nepal and Sri Lanka.
With a population of around 1.4 billion, most of India’s wheat production is destined for the domestic market.
The heat wave recently forced production estimates to be reduced from 110 million tons to 105 million, according to data from the Ministry of Commerce.