Wheat price rose sharply on Monday, after India restricted wheat exports to preserve its food security. Prices of agricultural commodities surged at the end of February after Russia attacked Ukraine which previously accounted for 12.0% of global exports. Together with Russia both countries account for 25% of global wheat exports, with 13% of corn exports coming from Ukraine alone, according to RBC Capital Markets analysts. Russia's aggression caused shortages of wheat across the globe which boosted concerns regarding famine and social unrest in many developing countries.
Upward move was additionally supported by rising fertiliser prices and weak harvests. Over the weekend, India which is the second-largest wheat producer globally, announced exports ban after its hottest March on record and as fallout from the Russia-Ukraine war continues to reverberate. The production has dropped by 3 million tons from 106 million tons last year, while prices on the domestic market have surged 20% to 40%. Therefore Indian government must safeguard domestic supplies amid heat waves that threaten crop yields. However, India's Commerce Secretary B.V.R. Subrahmanyam reassured that India would continue to export to neighboring countries -Bangladesh, Nepal and Sri Lanka. It is worth nothing that India in not a major wheat exporter as it consumes 102 millions tons out of 109 million tons produced, however information that such highly populated country is securing its food supplies raised concerns among commodity investors.
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India wheat exports are relatively small compared to Russia or EU. Source: Bloomberg
WHEAT prices launched today's session with a massive bullish price gap and if current sentiment prevails, upward move may accelerate towards recent high around $1355. The nearest major support to watch lies at $1140 and coincides with 23.6% Fibonacci retracement of the last upward wave. Source: xStation5
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