With the Russian invasion of Ukraine leading to further rises in wheat prices, focus is now turning to whether the US and India can increase exports and alleviate the global cost and supply woes.
But supply issues in the US, could add further upward pressure on prices, according to analysts.
Russia was, before the war, the world’s biggest wheat exporter, with Ukraine ranked anywhere from third to fifth most years, but exports from both countries have been disrupted since February.
While the US and India are major wheat growers with huge domestic markets to supply, India’s government said last week it could have tens of millions of tonnes of wheat available for export.
“India is in a comfortable position to meet requests from wheat importing countries,” Sudhanshu Pandey, a civil servant at India’s consumer affairs ministry, told Reuters, echoing pledges made by Narendra Modi, India’s prime minister, during an 11 April meeting with Joe Biden, the US president.
Boris Johnson on Friday met Modi – who has so far rebuffed demands for India to back sanctions on Russia – to discuss trade and security. The previous day both governments announced what they said were around £1billion worth of commercial deals, including Deliveroo’s planned opening of a new “technology hub” in Hyderabad. The UK and India also recently started negotiating a free trade deal, which Johnson said he hoped would be wrapped up by the end of the year.
However, optimism that the world’s major wheat growers could step in to offset market disruptions has been tempered by concerns about the US harvest and the likelihood of European wheat growers focusing on domestic supply.
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After another record high last week for UK feed wheat futures, which closely follow world prices, the Agriculture and Horticulture Development Board (AHDB) this week said US wheat crop developments were causing “increasing concerns around new crop availability” after planting was delayed “for many” by cold and wet weather.
This US Department of Agriculture said on Monday that 30% of the country’s winter wheat was in “good to excellent “condition, the lowest level since 1996.
Dutch bank ING this week in turn dampened hopes that additional European wheat could become available on world markets, saying “shipments from the EU have slowed down to a trickle in recent weeks as countries aim to bolster domestic stocks given the supply uncertainties”.
Supply doubts grew after world food prices hit a record high last month, according to the UN’s Food and Agriculture Organization, which said the Ukraine war had further disrupted world markets already reeling from the impact of coronavirus pandemic restrictions and related spikes in energy and transport costs.
Speaking to the BBC on Thursday, World Bank president David Malpass warned of a “human catastrophe” following the Russian invasion, with rising food prices and potential shortages likely to affect poorer people in importing countries hardest.
