Wheat prices have risen on foreign markets after India restricted the main cereal’s export.
In Chicago, the benchmark wheat index climbed as high as 5.9%, the highest level in two months.
The export embargo comes after India’s wheat crops were devastated by a heat wave, sending local prices to new highs.
Wheat prices have risen by about 60% this year on global markets, raising the cost of everything from bread to noodles.
India’s government stated that exports backed by letters of credit previously given and to nations requesting supply “to satisfy their food security needs” will be permitted.
Officials from the government also stated that the prohibition was not indefinite and may be changed.
Agriculture ministers from the Group of Seven (G7) nations gathering in Germany, however, have criticized the decision.
“If everyone begins imposing export limits or closing markets, the situation will become worse,” Cem Ozdemir, Germany’s food and agricultural minister, warned.
The G7 is a group of the world’s seven most powerful “advanced” economies, which control worldwide commerce and the international financial system. Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States are the countries involved.
Despite being the world’s second-largest wheat producer, India has never been a major exporter since the majority of its harvest is sold on domestic markets.
However, following the Russian invasion, Ukraine’s wheat exports plummeted. With droughts and floods damaging crops in other key producers, commodity traders expected India to fill the gap.
India had planned to send a record 10 million tonnes of wheat this year before the restriction.
According to the United Nations, global food prices hit a new high in March after the Ukraine war prompted a “giant surge” (UN).
This happened after the conflict cut off supply from Ukraine, the world’s largest exporter of sunflower oil, raising the price of alternatives. The country is also a key producer of grains like maize and wheat, both of which have seen significant price increases.
Global food prices fell marginally in April, according to the UN, but are still about 30% higher than this time last year.
Inflation has been rising over the world due to rising food costs and an increase in the cost of electricity.
As a result, major central banks, such as the Federal Reserve of the United States and the Bank of England, have raised interest rates in an attempt to contain growing prices.
This has sparked fears that increasing borrowing costs could hurt global economic growth, with some prominent analysts predicting a recession.
On Sunday, Lloyd Blankfein, the executive chairman of Wall Street investment bank Goldman Sachs, warned the US, the world’s largest economy, faces a “very, very high danger” of recession.
Mr. Blankfein’s remarks on CBS’s Face the Nation come the same day as Goldman Sachs experts lowered their US economic growth predictions for this year and next year.