A The price of wheat reached 438.25 euros per tonne at the end of the session, a new record for this cereal, which was already trading at high levels, following the Russian invasion of Ukraine.
“This is an absolute record on Euronext. The previous record was March 7, at $422.50 per ton at the close”declared or corretor Damien Vercambre, da Inter-Courtage, to AFP.
The world’s second largest producer of wheat, India announced on Saturday that it would ban its exports of this cereal, given the drop in its production due, in particular, to extreme heat waves.
New Delhi, which has pledged to supply wheat to fragile countries dependent on imports from Ukraine, wants to ensure “food security” for its population of 1.4 billion.
This decision which will “aggravate the crisis” of grain supply in the world, the G7 was alarmed on Saturday.
However, during a trip to Europe in early May, Indian Prime Minister Narendra Modi declared, alongside French President Emmanuel Macron, that he was determined “to respond in a coordinated and multilateral manner to the risk of aggravation of the crisis. food because of the conflict in Ukraine”.
The price increase also reflects uncertainty about New Delhi’s intentions: “The contracts already signed must be respected, but we do not know what will happen to a delivery of 500,000 tonnes of wheat to Egypt, which is being negotiated”, said Damien Vercambre, during the opening of the session on Euronext.
This ban decision is attributed to the lower harvest estimates, around five percent, of the 109 million tonnes harvested in 2021, but not only.
“Unlike the Russian Federation, which has had a system of quotas and export taxes in place for years, India finds it more difficult to control the volumes exported”, many producers changing public operators for the benefit of private buyers, who pay more for cereals, explained Damien Vercambre.
On the world markets, the shock is all the greater as India increased its importance on this market: after having exported seven million tons in 2021, it was now aiming for 10 million, which seemed to mitigate the fall in Ukrainian exports. .
Indeed, the subcontinent’s crisis comes at a very bad time, since Ukraine, which was on the way to becoming the world’s third largest wheat exporter, should see its production reduced by a third, according to forecasts from the American department. of American Agriculture, which estimates the Ukrainian export capacity in 2022 limited to 10 million tons, against 19 million last year.
The price of wheat has increased by 40% since the start of the Russian invasion of Ukraine, also pricing in current drought risks in the southern United States and western Europe.
As the conflict caused by the Russian Federation in Ukraine drags on and the Australian and Canadian harvests are expected, the promise of Indian wheat, in the harvest phase, had somewhat relieved the markets, particularly in the Middle East and in Asia, India traditional customers.
This Indian ban on wheat, in addition to Indonesia’s ban on palm oil, in the name of food sovereignty, promises to increase pressure on importing countries like Morocco, whose cereal production will fall by more than 60%, or Iraq, where the lack of water has caused the reduction of cultivated areas by more than half.
For market observers, prices will continue to be supported, because “the demand continues to exist”.
News by the Minute nominated for Marketeer Awards
O Up-to-the-minute news is one of the nominees for the 2022 edition of the Bounty Marketerin the category of Digital media. Voting takes place until May 31.
To help us win, all you have to do is access the website of the initiative organized by the magazine marketing agentby clicking hereand complete the form by selecting Up-to-the-minute news in the category of Digital media then formalize the vote. Thank you for your preference!