INDIA NEWS- BUSINESS
Following India’s export prohibition, global wheat prices have risen.
In Chicago, the benchmark wheat index rose as much as 5.9 percent, the most in two months.
The export ban comes after a heatwave devastated India’s wheat crops, sending domestic prices to all-time highs.
Bread, cakes, noodles, and pasta have all increased in price in recent months as wheat prices have skyrocketed on global commodity markets.
The Indian government stated that it would continue to allow exports backed by previously issued letters of credit, as well as to countries that request supplies “to meet their food security needs.”
Officials from the government also stated that the ban was not permanent and could be lifted.
Agriculture ministers from the Group of Seven (G7) nations meeting in Germany, however, have criticized the decision.
“If everyone starts imposing export restrictions or closing markets, the crisis will get worse,” Cem Ozdemir, Germany’s food and agricultural minister, said.
The G7 is a group of the world’s seven most powerful “advanced” economies, which control worldwide trade and the international financial system. Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States are the countries involved.
Despite being the world’s second-largest wheat producer, India has never been a major exporter because the majority of its harvest is sold on domestic markets.
However, following the Russian invasion, Ukraine’s wheat exports plummeted. With droughts and floods damaging crops in other key producers, commodity traders expected India to fill the gap.
India had planned to ship a record 10 million tonnes of wheat this year before the restriction.
India makes a U-turn on wheat exports
Just a week ago, senior officials from India’s commerce ministry told me that the country’s wheat exports would be increased to meet increased worldwide demand. They agreed with Prime Minister Narendra Modi.
“India was ready to feed the globe,” he said.
As a result, the restriction appears to be a significant policy shift. It also alluded to the government’s concerns over growing domestic pricing. However, the move could provide a foreign policy issue for India, according to one analyst.
Delhi had been making noises about getting a dispensation from a World Trade Organization provision that makes it impossible for governments to export grains that are acquired at a fixed price from farmers for official reserves, as the Indian government does frequently. Some countries appeared eager to assist India in finding a way to sell wheat to the rest of the world.
The same countries are likely to be irritated now.
In March, global food prices reached a new high.
According to the United Nations, the Ukraine war prompted a “giant leap” (UN).
This came after the conflict cut off supply from Ukraine, the world’s largest exporter of sunflower oil, raising the price of alternatives. The country is also a key producer of grains like maize and wheat, both of which have seen significant price increases.
Global food prices fell marginally in April, according to the UN, but are still about 30% higher than this time last year.
Inflation has been rising over the world due to rising food costs and an increase in the cost of electricity.
As a result, major central banks, such as the Federal Reserve of the United States and the Bank of England, have had to hike interest rates.
This has sparked fears that increasing borrowing costs could hurt global economic growth, with some prominent analysts predicting a recession.
On Sunday, Lloyd Blankfein, the executive chairman of Wall Street investment bank Goldman Sachs, said the US, the world’s largest economy, faces a “very, very high danger” of recession.
Mr. Blankfein’s remarks on CBS’s Face the Nation come the same day as Goldman Sachs experts lowered their US economic growth predictions for this year and next year.