India halting wheat exports threatens to drive food prices further up

India’s move to manage its food security by way of restricting wheat exports threatens to drive food prices further.

The decision by India to suspend wheat exports has resulted in prices escalating. India’s decision to halt wheat exports came after a record-breaking heatwave parched the crop during a crucial period, spurring estimates of slumping yields.

The output risk created a dilemma for India, which has tried to fill the gap as the shortfall in Ukraine’s exports pushes buyers toward alternative origins.

Wheat supplies from India usually go to Bangladesh, Sri Lanka, the United Arab Emirates and Indonesia. 

However, India said it will approve exports to countries that require wheat for food security needs and based on the requests of their governments. It will also allow shipments for which irrevocable letters of credit have been issued.

Price Futures Group Inc. Vice President Jack Scoville, as reported by Bloomberg, shared that traders say that the new ban puts an additional strain on the world export market, considering that India was expected to be an alternative to Russia and Ukraine amid the ongoing war there.

“The surprising thing is that India isn’t even a prominent exporter on the world stage. The fact that it could have such a major impact underscores the bleak prospect of global wheat supplies. War has crippled Ukraine’s exports, and now droughts, floods, and heatwaves threaten crops in most major producers,” he said.