Wheat prices are rising, along with food protectionism

5/17/2022 4:03:00 PM

More countries are putting these kinds of export controls in place — but that only exacerbates the issue

Bread is one of the more crucial ingredients in maintaining world stability — and it's getting dangerously expensive.

More countries are putting these kinds of export controls in place — but that only exacerbates the issue

Axios on email Data: Chicago Board of Trade, FactSet; Chart: Simran Parwani/Axios Bread is one of the more crucial ingredients in maintaining world stability — and it's getting dangerously expensive.‘Unretiring'? Here's How to Handle Your Medicare Coverage If You Return to the Workforce Approximately 30% of the world's wheat comes from Russia and Ukraine.The price of wheat on the Euronext stock exchange hit a record high on Monday morning, with the most recent rise being put down to a ban on most wheat exports from India.Wheat futures climbed by the daily limit on Monday, following India’s plans to limit most of its exports of the commodity, as fallout from the Ukraine war continues to reverberate.

Why it matters: As food prices rise around the world due to the war, extreme weather and inflation, more countries are putting these kinds of export controls in place — but that only exacerbates the issue.At least 43 such protectionist measures have been implemented since the Russian invasion, according to data cited by the New York Times earlier this month.Ukraine has some of the world's most arable farmland, but without sufficient fertilizer farmers won't be able to harvest the crops they planted back in autumn come late June and July.These include restrictions put in place by Russia and its ally, Belarus, along with Indonesia's ban on palm oil exports and China's prohibition on.This has prompted those within the EU to express concern regarding various nations, including India, implementing export bans on various in-demand products.Driving the news: Wheat prices surged to near record-high levels Monday after India said it would ban exports as it deals with an extended, climate-change-driven heat wave."That's a bigger problem for the world, because those inventories being trapped are going to cause supply disruptions for global wheat.What they're saying: "These measures threaten to further tighten global supplies, and will create price pressure on food as we head further into 2022," Kelly Goughary, a senior research analyst at Gro Intelligence, tells Axios.47 a bushel, and its highest level since mid-March.

Goughary hasn't seen this level of export controls in her 15 years in the industry.P.“And we think that this is a tendency which can only actually aggravate the problem,” specifically giving a forthcoming ban on the export of palm oil from Indonesia as something which would only “make matters worse”.State of play: Russia's invasion of Ukraine cut off exports from that region — responsible for more than a quarter of the world's supply — and sent buyers scrambling to find other source countries, like India.India is the ninth-largest wheat exporter in the world, according to."Commodities can participate positively in an inflationary environment, so that's what investors are doing," Gilbertie said.

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