India, the world’s second-largest wheat producer, is expected to have a significant impact on the international market when it bans wheat exports in the name of food security.
A chain shock is inevitable as even India bans exports while international prices are skyrocketing due to the war between Russia and Ukraine, the major wheat producers.
According to Indian media and Archyde.com on the 14th, India’s Department of Foreign Trade (DGFT) announced an immediate ban on wheat exports the night before.
The Ministry of Foreign Trade explained the background to the measure, saying that food security in India, neighboring countries and other vulnerable countries is at risk due to the rise in international smuggling.
The Indian government then announced that it would change its wheat export policy from ‘free’ to ‘ban’ to ensure food security and meet the needs of neighboring countries and other vulnerable countries.
However, if an irrevocable letter of credit (ICLC) was opened before the 13th or the central government of India granted permission at the request of another country, the proviso was attached that wheat export would be permitted.
India’s announcement of a ban on wheat exports is expected to have a cascading wave of wheat prices around the world.
As Russia and Ukraine, which account for 25% of the world’s wheat exports, are at war with each other, wheat supplies have decreased.
As of March, the price per ton of wheat traded on the Chicago Mercantile Exchange was $407, up more than 30% from last year.
India has been expected to be a country that can make up for the world’s wheat shortage.
Until last week, the Indian government said it did not need to control exports, given its estimates of wheat production this year.
In fact, the Indian government announced on the previous day that it would send trade delegations to nine countries, including Indonesia, Morocco and Tunisia, to expand wheat exports with a target of 10 million tons of wheat export for the fiscal year 2022-2023 (starting in April every year).
India exported 7 million tonnes of wheat in the 2022-2022 fiscal year, regarding half of which was sold to Bangladesh.
However, as international wheat prices showed no sign of calming along with concerns regarding a decrease in production due to the heat wave, and domestic food prices rose in numbers, it is known that they turned to wheat export control.
India’s consumer price index rose 7.79% last month, the highest in eight years.
In particular, retail food prices rose by a whopping 8.38%.
In particular, if the price of wheat in the international market is much higher than that in the domestic market, it seems that wheat producers and distributors focus on exports, raising concerns that the price of wheat in the domestic market may follow.
/yunhap news