India decided on Saturday, the second largest producer of it in the world, to ban wheat exports, citing its reading due to sweltering heat waves that reduced production and pushed domestic prices to an all-time high.
Commenting on the consequences of this Indian move on the turbulent global wheat and its derivatives markets, which are witnessing record increases in prices, Amer Al-Shobaki, an expert and economic advisor, said in an interview with Sky News Arabia: “The Indian decision will be met by global wheat markets at the beginning of next week on Monday, and therefore it will witness As a result of this, chaos and turmoil in trading, as a result of this step, which is considered a blow to wheat markets, which are already suffering due to the impact of the Russian-Ukrainian war. India is one of the largest wheat exporters in the world, and its rank is the eighth in the list of those countries after Ukraine directly, its wheat exports were It is widely relied upon to compensate somewhat for the shortfall in Russian and Ukrainian wheat supplies due to the war and damage to supply chains.”
Global wheat prices are steadily rising, as the economist explains, adding: “It amounts to about 410 euros per ton in Europe, for example, which makes it close to the record prices recorded by wheat prices last March, and with this Indian decision, prices will of course rise more. With the start of transactions and trading within two days, which will lead to a new chaos in the food commodity markets globally, and will deal a blow to those who were betting on absorbing these markets for the repercussions of this crisis, and so with the rise in commodity prices, it will exacerbate as a collection of destitution and hunger in poor countries that depend on wheat as a main food commodity. “.
Regarding the reasons for New Delhi’s decision and its causes, Al-Shobaki said: “India, due to the unusual and natural heat waves over the past three months, has decreased its wheat crop production by 5%, and in response it took the initiative to adopt protectionist measures to secure its food security, especially as India suffers From the rise in inflation rates by about 7 to 8 percent, and it is obliged to hedge and prepare for any emergency, we are talking about a country the size of almost a continent and about one and a quarter billion consumers.”
The spokesman continues: “The consequences of this sudden decision, which is more like a shock, will appear successively, and its impact will be very negative, especially on the efforts of Western politicians to try to reduce the rising inflation rates in Western countries. Indian wheat is the effort of Western capitals to rein in inflation.
The Indian move will contribute, in this case, to reducing global economic growth rates, as the timing of this step is almost tantamount to pouring oil on the fire of the global economic slowdown and stagnation, under the weight of the Russian-Ukrainian war and its disastrous results.
In turn, Timur Dowidar, a Russian economic expert and consultant in the business and investment sector, said in an interview with Sky News Arabia: “This Indian decision will have severe repercussions on the world’s food security, in light of the already existing shortage in global wheat supplies from Russia and Ukraine, two of the largest suppliers For wheat, as Russia is the first source of this strategic commodity around the world. In 2021, 121.3 million tons of grain were harvested, of which 76 million tons are wheat, and usually half of this number is exported abroad, but this year, in light of the war and its severe crisis, it stopped Moscow has suspended grain exports until the end of next June, in addition to halting exports of sugar, edible oil, especially sunflower oil, until the end of next August.
The regions that produce grain in Russia are generally, as Dowidar explains: “They are located in areas adjacent to the war arena and military operations, and this, of course, affects the cultivation of grain and its yields, its harvesting and harvesting, as well as the damage and obstruction of supply and supply chains in light of the crisis in general. Especially from the Black Sea ports.
Global buyers were relying on India for supplies of wheat, after exports from the Black Sea region declined since the start of Russian military operations in Ukraine on February 24.
Wheat prices in India rose to a record level, as they reached in some spot transactions the equivalent of 322.71 dollars per ton, compared to the minimum fixed government support price of about 260 dollars.
India’s wheat exports reached a record 7 million tons in the fiscal year ending in March, up more than 250 percent from the previous year, after benefiting from higher global wheat prices in the wake of the Ukraine crisis.