India has banned exports of wheat due to soaring global prices largely precipitated by lack of supply from warring Ukraine and Russia, which together normally account for nearly one-third of global wheat exports.

Exports already arranged under letter of credit (L/C) terms will however be allowed.

L/C arrangements

"As a transitional arrangement, export will be allowed in case of shipments where irrevocable L/Cs have been issued on or before the date of this notification, subject to documentary evidence as prescribed," according to a notice issued on 13 May by India's ministry of commerce and industry.

It says exports will also be allowed on the basis of permission granted by the Indian government to other countries to meet their food security needs if requested by their governments.

Global demand

The Indian government says that the spike in global wheat prices threatens its own food security and that of other neighbouring and vulnerable countries.

Buyers have looked to India for wheat as the war in Ukraine hit supplies. Top buyer Egypt as well as Turkey have already had their requests for wheat approved by India.

Policy backfire

India's food secretary Sudhanshu Pandey said on Saturday that he expected the country's export ban would reduce global prices.

But on Monday wheat prices surged by almost 6 per cent in just a few hours to reach the maximum price range permitted for futures contracts in each trading session.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.