Wheat: Why India's export ban matters to the world

Image source, EPA

India's decision to ban wheat exports was defended by the government after it was accused of making the world's food supply situation worse.

The German Food and Agriculture Minister said after the ban was announced that it would make the situation worse.

The export ban should not affect global markets because it is not a major wheat exporter according to India's Commerce Minister.

The impact of India's move has yet to be determined.

On 13 May, India's ban was announced, after hot weather caused the wheat crop to fall.

Although India is not a major wheat exporter, the move spooked global markets with the Chicago benchmark wheat index rising by over six percent.

The prices of some of the main types of wheat went up over the course of a few days.

The price of wheat had gone up after the Russian invasion of Ukraine.

One of the world's biggest wheat exporting countries, Ukraine, has been disrupted by the war.

Global buyers were depending on supplies from India after exports from the Black Sea region plunged because of India's ban.

India accounts for less than 1% of the global wheat trade. Subsidy food for the poor is provided by it.

Just before the ban was announced, India was planning to ship a record 10 million tonnes of wheat this year, compared with just two million last year.

Even after the ban, several countries said they were in touch with India to keep exports going.

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India will continue to assist neighbours in their hour of need by exporting wheat to some countries.

It has top export markets that include Bangladesh, Nepal, and Sri Lankan.

According to the Observatory of Economic Complexity, Nepal imported more than 90 percent of its wheat from India in 2019.

It is not known if these countries will still get Indian wheat under existing contracts or if they will get supplies in the future.

Egypt says it will continue to purchase Indian wheat. It's a big importer of wheat.

The International Monetary Fund has called on India to reconsider the export ban, saying it could help alleviate the current wheat supply crisis for countries most affected by the war in Ukraine.

Some major wheat-exporting countries have been affected by the weather.

"Drought, floods and heat waves threaten crops in some other major producers, including the US, Canada and France."

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According to a US government report, global wheat production will be the lowest in four years, and global wheat stocks will be the lowest in six years.

According to Gro Intelligence, global fertiliser prices have tripled over the last year, which could cause significant reductions in crop yields this year.

According to the estimates, global wheat stocks are down to their lowest level since the financial crisis.

China, the world's largest producer of wheat for its huge population, said in March that its winter crop could be the worst in history.

Whether or not the harvest will be badly affected is still uncertain.

If it is, China might want to buy on global markets to build up its stocks, tighten its supplies and push up prices.