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India’s Directorate-General of Foreign Trade banned wheat exports on Friday, causing market prices to skyrocket around the world and prompting expressions of grave concern from humanitarian groups.
Only a month ago, Indian officials were boasting of plans to step up and replace lost wheat shipments from the Russia-Ukraine war.
Wheat prices hit a two-month high on Monday as markets reacted to Friday’s surprise announcement, which cited spiking global prices, unexpected shortfalls in production due to hot weather, and India’s concerns over domestic food security to justify banning exports.
“Export will be allowed in case of shipments where an irrevocable letter of credit is issued on or before the date of notification. Export will be allowed on the basis of permission granted by the government of India to other countries to meet their food security needs and based on the request of the governments,” the Indian government notice said.
Only a week ago, Indian Food Secretary Sudhanshu Pandey downplayed concerns of an export ban, claiming India had a vast surplus stock of wheat despite disappointing production due to a two-month heatwave. Soaring food inflation evidently played a role in making the Indian government change its mind.
The Deccan Herald noted India sent delegations to nine countries to discuss expanding wheat exports only last week.
Reuters reported on Monday that India’s export ban was imposed so suddenly that 1.8 million tonnes of grain are trapped at ports. The owners of the grain “may have to re-sell those cargoes into the weaker domestic market, which has been under fresh price pressure since the export ban news emerged.” The owners of the cargo will also incur reloading and transportation costs.
“Vessel loading has stopped at a few ports. Thousands of trucks are waiting to unload at ports without any clarity,” a Mumbai-based trader reported.
“The Commerce Ministry and even state governments were helping exporters. Exports were profitable, so we never thought the government would do something like this,” a dealer with a global trading house complained.
U.S. and European officials said they were deeply concerned about worldwide food security after India announced its export ban. Agriculture ministers from the Group of Seven (G7) nations condemned India’s announcement immediately.
“If everyone starts to impose export restrictions or to close markets, that would worsen the crisis. We call on India to assume its responsibility as a G20 member,” German agriculture minister Cem Ozdemir said.