Wheat prices rose after India banned exports, putting upward pressure on food costs as global supply shortages roiled international markets.
According to reports, futures traded in Chicago jumped as much as 5.9% to USD 12.47 per bushel, the biggest level in two months. Wheat prices have increased by more than 60% this year, owing to the disruption caused by Russia's invasion of Ukraine.
Almost a third of the world's wheat exports come from these two European countries. Even while inclement weather curtailed the crops of other major exporters, India, the world's second-largest wheat producer after China, had filled a gap in markets left by decreased output from Ukraine, thanks in part to a bountiful harvest of 7 million tonnes last year.
However, after initially claiming that exports would be halted, India altered direction over the weekend as domestic inflation rose to its highest level in eight years as a result of rising food costs, as per Industry reports.
With limited exclusions, New Delhi announced the restriction "in order to manage the country's overall food security and to meet the needs of neighbouring and other vulnerable countries." "It basically exacerbates the food shortage risk," said Robert Rennie, global head of market strategy at Westpac.
The abrupt change came after two months of scorching heat in India, with temperatures reaching 45 degrees Celsius across large areas of the wheat belt.