The Indian embargo, drought in Europe and war in Ukraine shoot up the price of wheat by 78%

The wheat market, already under heavy pressure from the war in Ukraineis now shaken by the embargo of India to its exports and in full reconfiguration of the sector with measures such as authorizing in Argentina the cultivation of genetically modified wheat.

India on Friday announced an eral ban on wheat exports to ensure the food security of its 1.4 billion inhabitants.

This embargo of the world’s second largest producer, which had said it was willing to reserve up to 10 million tons of its next harvest, surprised the markets.

record broken

The price of wheat broke a record on Monday reaching 438.25 euros per tonne in the European market for early delivery.

On Tuesday, HRW (Kansas City-traded winter wheat) hit another record after rising 78% since mid-January.

All the indicators are in the red and nothing seems to be able to replace the Ukrainian production now destabilized by the war.

In 2021 India exported almost 20 million tons but for 2022 production forecasts were cut by a third, according to the latest monthly report from the US Department of Agriculture.

Following India’s move, all analysts forecast “high prices” in “a tense market until next year.”

“This is exactly what happened in 2008-2009. Food prices went up and many of the big exporting countries, including Argentina, capped their exports. And of course the world market was even tighter, which made push prices even higher,” says Wes Peterson, a professor of agricultural economics at the University of Nebraska-Lincoln.

“Over the last 20 or 25 years, the prices of agricultural products have followed an upward trend. That trend, and the spikes, are the result of climate change,” he said.

Transgenic wheat from Argentina

This year’s crops in the Middle East, India and Morocco — which has lost half its production — have been severely affected by heat and water shortages, and there is growing concern in the central plains of the United States. United States and in Western Europe, especially in France, where the government has lowered forecasts for wheat yields.

In this very tense context, Argentina has just authorized the commercial cultivation of transgenic wheat varieties that carry a sunflower gene that in theory makes them more resistant to drought.

The decision, taken in 2020, was the last stage before planting scheduled for the next campaign, which makes Argentina the first country in the world to allow the commercialization of transgenic wheat.

“We don’t know what volume is expected, but Argentina has already received the agreement from its main client, Brazil, which has authorized the consumption of transgenic wheat,” said Damien Vercambre, of Inter-Courtage.

Without waiting for the next campaign, the United Nations is trying to ensure supplies to the most fragile countries that depend on grain from the Black Sea.

The United States hopes to convince India to “reconsider its decision” to impose an embargo at a Security Council meeting on Thursday.

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