Mumbai, May 15 (BNA) India banned wheat exports on Saturday, days after saying it was targeting record shipments this year, as severe heat wave curtailed production and local prices hit a record.
The government said it would continue to allow exports, backed by letters of credit already issued, to countries requesting supplies “to meet their food security needs”.
Senior government officials said at a press conference that the move to ban foreign shipments was not permanent and could be modified.
Global buyers were dependent on supplies from the world’s second largest wheat producer after exports from the Black Sea region declined. Before the ban, India had aimed to ship 10 million tons this year.
Officials added that there has been no significant drop in wheat production this year, but unregulated exports have pushed up domestic prices.
“We don’t want wheat trading to happen in an unregulated manner or hoarding,” Commerce Minister BVR Subrahmanam told reporters in New Delhi.
Despite not being one of the world’s largest wheat exporters, India’s ban could push global prices to new highs due to already weak supply, which will hit poor consumers particularly hard in Asia and Africa.
Rising food and energy prices pushed India’s annual retail inflation close to an eight-year high in April, bolstering expectations that the central bank will raise interest rates more aggressively.
Wheat prices in India have soared to record levels, reaching in some spot markets as high as 25,000 rupees ($320) per ton, well above the minimum government support price of 2,050 rupees.
The rising costs of fuel, labour, transportation and packaging have also driven up the price of wheat flour in India.
India this week set its record export target for the fiscal year that began on April 1, saying it would send trade delegations to countries such as Morocco, Tunisia, Indonesia and the Philippines to explore ways to boost shipments.
In February, the government expected a production of 111.32 million tons, the sixth consecutive record crop, but it lowered the forecast to 105 million tons in May. Read more
Higher temperatures in mid-March mean the crop could instead be around 100 million tonnes or even less, a New Delhi-based trader with a global trading company said.
Taking advantage of rising global wheat prices, India exported a record 7 million tons of wheat in the fiscal year ending in March, an increase of more than 250% over the previous year.
Despite lower production and government purchases by the state-run Food Corporation of India (FCI), India could have shipped at least 10 million tons of wheat this fiscal year, Jain said.
So far, the committee has purchased just over 19 million tons of wheat from local farmers, compared to last year’s total purchases of 43.34 million tons. She buys grain from local farmers to run a food welfare program for the poor.
In contrast to previous years, farmers preferred to sell wheat to private traders, who offered prices better than the government’s fixed price.
In April, India exported a record 1.4 million tons of wheat and already signed deals to export about 1.5 million tons in May.
MI