Wheat is unloaded on the outskirts of Amritsar, India, April 16, 2022 (AFP/Narinder NANU)
How far will it go? At its highest levels since the war in Ukraine, the price of wheat broke a record on Monday at the close of the European market, after India announced a ban on its grain exports.
Wheat reached 438.25 euros per ton at the close, a new high for grain already trading in gold prices in a tight global market. “This is an absolute record for all maturities in Euronext. The previous record goes back to March 7, 2022 with wheat closing at 422.50 euros per ton,” Inter Cortage broker Damien Verkamper told AFP.
Already at the opening, prices rose to 435 euros per ton on the European market.
India, the world’s second largest wheat producer, announced on Saturday that it would ban the export of this commodity, except with special government permission, in the face of reduced production due to particularly severe heat waves.
New Delhi, which previously pledged to supply wheat to fragile countries that previously depended on exports from Ukraine, wants to ensure “food security” for India’s 1.4 billion people. A decision that would “exacerbate the crisis” of grain supplies at the global level, alarmed the Group of Seven on Saturday.
Indian Prime Minister Narendra Modi alongside French President Emmanuel Macron, at the Elysee Palace in Paris, May 4, 2022 (AFP/STEPHANE DE SAKUTIN)
Indian Prime Minister Narendra Modi, during a tour of Europe in early May, said he, along with French President Emmanuel Macron, was determined to “respond in a coordinated and multilateral manner to the risk of a food crisis exacerbated by the conflict in Ukraine”. .
– Inventory protection –
The price hike also reflects uncertainty about New Delhi’s intentions: “The contracts already signed must be respected, but we don’t know what will happen to deliver 500,000 tons of wheat to Egypt. The trading is in progress,” Damien Verkamper said at the opening. From the market at Euronext.
This ban is explained in particular by worse-than-expected harvest estimates – down 5% compared to the 109 million tons of wheat harvested in 2021 – but not only.
“Unlike Russia, which for years has implemented quotas and export taxes, India undoubtedly has more difficulty in controlling the volume of exports,” with many producers abandoning public operators in favor of private buyers paying high prices for grain, explains Damien Verkamper, from He sees this decision as a way for India to protect its stocks and curb accelerating food price inflation.
In global markets, the shock has been even more severe as India, the small thumb of wheat, is gaining momentum: it exported 7 million tons in 2021 and was counting on 10 million this year, and is now emerging as one of the possible alternatives to Ukrainian wheat.
– Ukraine crisis –
The growth crisis in the Indian subcontinent comes at a very bad time: Ukraine, which was on track to become the world’s third largest wheat exporter, should see its production fall by a third this year, according to a forecast by the US Department of Agriculture (USDA). ), which estimates Kyiv’s export capacity at only 10 million tons in 2022, compared to 19 million tons a year earlier.
A wheat field in Ossas-Suhare, in Pyrénées-Atlantiques, on May 27, 2021 (AFP/GAIZKA IROZ)
At an already unprecedented level, the price of wheat has risen by 40% since the start of the war and has remained flat due to the current drought risks in the southern United States and Western Europe.
As conflict falters in Ukraine and new Australian and Canadian crops await, the promise of Indian wheat, which is harvested, has provided some relief to stressed markets, particularly in the Middle East and Asia, traditional customers from India.
India’s ban on wheat, echoing Indonesia’s ban on palm oil in the name of food sovereignty, promises to keep up the pressure in importing countries, such as Morocco, whose grain production will fall by more than 60%, or Iraq where water shortages have reduced acreage. by half.
For market watchers, prices will remain strong because “demand is still there.”