Wheat prices rose by the maximum amount allowed yesterday after India imposed a ban on exports.
Wheat futures in Chicago were up about 6% to $12.47 a bushel, their highest level in two months. Wheat prices have shot up more than 60% this year, driven by disruptions from Russia’s invasion of Ukraine. Those two countries account for almost a third of the world’s wheat exports. India is the world’s second-biggest wheat producer after China, and ranks 8th in terms of exports.
India had denied it would halt exports but reversed course over the weekend after domestic inflation surged to the highest level in eight years. Rising fuel and food prices prompted the Bank of India to hike interest rates this month for the first time in four years.
The export ban was announced just days after the U.S. Department of Agriculture forecast that global wheat production would drop for the first time in four years this year. The price spike in wheat could increase the costs of a wide range of products, from bread to cakes and noodles.
Prices of other U.S. varieties of wheat also jumped, with hard red winter wheat futures in Chicago hitting exchange limits, and spring wheat rising as much as 4.5% with both varieties hitting their highest intraday prices since 2008.
"Traders do expect Black Sea wheat futures to trade slightly lower throughout the summer, according to the CME, but futures prices still remain well above historic highs as uncertainty dominates the commodities markets," stated Caleb Silver, Investopedia's editor-in-chief.