Wheat futures rocketed limit-up after India curbed exports in the face of waning hopes for its heat-tested harvest, taking to some 40% the proportion of world wheat shipments affected by trade curbs.
Chicago soft red winter wheat futures, the world benchmark, for July stood in late deals on Monday up the maximum daily move permitted by the exchange of $0.70 a bushel, equivalent to 5.9%, taking the contract to $12.47 ½ a bushel.
July hard red winter wheat futures also soared limit-up, to $13.52 a bushel – a 14-year high for the contract, which has a higher protein count that soft red winter wheat.
Minneapolis spring wheat, higher protein still, for July also jumped its maximum, of $0.60 a bushel, to touch $13.85 a bushel, also setting a 14-year top.
In Europe, best-traded London feed wheat futures for November jumped 4.8% to close at $352.00 a tonne. The July contract added 2.6% to settle at £361.00 a tonne, a fresh record closing high for a spot lot.
Paris September soft wheat finished up 5.2% at E438.25 a tonne, to exceed the previous all-time closing high set two months ago.
The gains followed Saturday’s news that India was ban wheat exports, bar those to countries that request supplies “to meet their food security needs”, after high temperatures curtailed expectations for this year’s harvest.
India – which had in February forecast a 111.3m-tonne harvest this year, a sixth successive record crop – earlier this month said output could fall to 105m tonnes “on account of shrivelling of wheat grains around 20% due to terminal heat and heat waves”.
Some other commentators are more downbeat still, with Agritel on Monday saying that “due to record temperatures” it had downgraded its Indian wheat harvest forecast “to below 100m tonnes”.
“After exporting 10m tonnes this season, the country will be forced to stop its international sales, given the climatic situation,” the analysis group added.
India – while historically a spasmodic wheat exporter, and indeed often a net importer, as in 2016-17 and 2017-18 – has taken an increasing presence in world shipments, after drought cut exports from the likes of Canada, while war has cut-off Ukraine from trade, and political moves cut off trade from some other countries.
Indian shipments in April set a monthly record of 1.4m tonnes, with a reported 1.5m tonnes expected to have been exported this month.
The United Nations Food and Agriculture Organization (FAO) on Friday noted the role of India, and the European Union, in boosting their wheat offers in the face of reduced hopes of supplies from Russia and Ukraine.
However, Saturday’s announcement will add India’s supplies to the 36% of wheat shipments affected by export restrictions, as reported last week by Amis, the food monitoring service backed by the G20, as well as the FAO.
‘Persistent water deficit’
Other countries which have restricted wheat exports of late include Kazakhstan, which in April limited wheat shipments to 1m tonnes, while Russia in March banned exports of wheat to countries within the Eurasian Economic Union, bar Belarus which has helped it with the Ukraine war.
Egypt, better known as the world’s top wheat importer, also in March banned exports of the grain.
Meanwhile, dry weather in Europe and the US, besides the Ukraine conflict, is raising questions over how significantly the world’s 2022 harvest will be able to replenish world supplies.
Agritel noted that India crop loss “comes on top of the situation in the Black Sea basin and a likely drop in French production due to a persistent water deficit hardly eased by weekends’ storms”.
In France, the European Union’s top wheat producer and exporter, the FNSEA agriculture association said on Monday that weekend storms had provided some relief, but not enough, to crops with a 25% soil moisture deficit.