Chicago wheat futures (NYSEARCA:WEAT) jumped by their 6% limit overnight Monday after India banned exports, Barron's reports, further exposing tight global supplies following Russia's invasion of Ukraine and threatening to drive up food prices even more.
Soft red winter wheat for July delivery (W_1:COM) climbed $0.62/bushel, the normal daily price limit, to lock at $12.39/bushel, after hitting as high as $12.47/bushel to its highest since mid-March.
The export ban comes after a heatwave hit India's wheat crops, spiking domestic prices by 20%-40%.
India's Commerce Secretary B.V.R. Subrahmanyam told reporters on Sunday that the country's wheat production has dropped by 3M tons from 106M tons last year.
But India also said it will continue to allow exports covered by already issued letters of credit and support countries seeking to meet food security needs.
"India is not a big wheat exporter, but the fact that a big country scrambles to secure food supply left the market anxious," Danske Bank analysts said, according to Barron's.
The ban comes as the U.S. Department of Agriculture has forecast tighter global supplies due to the war in Ukraine and supply losses elsewhere.