India bans wheat exports as heat wave hurts crop, domestic prices soar

India bans wheat exports as heat wave hurts crop, domestic prices soar.

India, wheat exports, heat wave, crop, domestic prices

MUMBAI, May 14 (Reuters) - India banned wheat exports on Saturday, just days after saying it was targeting record shipments this year, as a scorching heat wave curtailed output and domestic prices soared to an all-time high.

The government said it would still allow exports backed by already issued letters of credit and to countries that request supplies "to meet their food security needs".

Global buyers were banking on supplies from the worlds second-biggest wheat producer after exports from the Black Sea region plunged following Russias Feb. 24 invasion of Ukraine. Before the ban, India had aimed to ship a record 10 million tonnes this year. read more

Although it is not one of the worlds top wheat exporters, Indias ban could drive global prices to new peaks given already tight supply, hitting poor consumers in Asia and Africa particularly hard.

"The ban is shocking," a Mumbai-based dealer with a global trading firm said. "We were expecting curbs on exports after two to three months, but it seems like the inflation numbers changed the governments mind."

Rising food and energy prices pushed Indias annual retail inflation near an eight-year high in April, strengthening expectations that the central bank would raise interest rates more aggressively. read more

Wheat prices in India have risen to record highs, in some spot markets hitting 25,000 rupees ($320) per tonne, well above the governments minimum support price of 20,150 rupees.

“It was not wheat alone. The rise in overall prices raised concerns about inflation and that’s why the government had to ban wheat exports,” said a senior government official who asked not to be named as discussions about export curbs were private.

India just this week outlined its record export target for the fiscal year that started on April 1, saying it would send trade delegations to countries such as Morocco, Tunisia, Indonesia and the Philippines to explore ways to boost shipments.

In February the government forecast production of 111.32 million tonnes, the sixth straight record crop, but it cut the forecast to 105 million tonnes in May. read more

A spike in temperatures in mid-March means the crop could instead be around 100 million tonnes or even lower, said a New Delhi-based dealer with a global trading firm.

"The governments procurement has fallen more than 50%. Spot markets are getting far lower supplies than last year. All these things are indicating lower crop," the dealer said.

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