International wheat prices jumped to a record high on Monday as an export ban by India, the latest country to use trade curbs to counter food inflation, threatened to further squeeze the world wheat supply strained by the war in Ukraine.
India is the world’s second-largest producer of wheat. Russia is the largest exporter with Ukraine in fifth.
The price, which was already high in the wake of Russia’s invasion of major wheat exporter Ukraine, jumped to €435 per tonne as the European market opened. Benchmark futures in Chicago rose as much as 5.9 percent to $12.475 a bushel, the highest in two months and within about $1 of the all-time high set just after Russia’s invasion.
Wheat has contributed to record highs for global food prices this year, as measured by the UN food agency, with Russia’s invasion of Ukraine disrupting the market by halting massive shipments from the Ukrainian seaports.
India’s embargo, prompted by a heatwave that has cut harvest prospects and sent domestic prices soaring, marks a policy U-turn after the government maintained just days earlier it was still targeting record exports of 10 million tonnes (mt) that would help compensate for Ukraine’s reduced supply.
The authorities said they will allow existing export sales covered by letters of credit and government-to-government deals to meet food security needs.
While many traders and analysts had expected export curbs at some stage due to the worsening effects of the heatwave, the sudden announcement adds to pressure in the market for one of the world’s most consumed cereals.
Facing spikes in food inflation, other nations have also sought to preserve domestic supply, with Indonesia banning exports of palm oil at the end of April.
India’s export ban comes as harsh weather conditions, including drought in parts of the United States and France, threaten production potential in other major exporting countries.