Damaged India Wheat Crop Could Drive Food Prices Higher

India’s wheat output could decline for a second year in a row, keeping domestic prices elevated and requiring an extension of the country’s current export ban.   

A sudden rise in temperatures hit India’s wheat crop earlier this month, followed by heavy, unseasonable rains coupled with hail. This could negatively impact wheat quality at a time when the country, the No. 3 producer worldwide, grapples with wheat shortages and high food inflation. India’s wheat stocks-to-use ratio, a measure of available supplies, is currently at its lowest level in six years, as seen in this Gro display. 

Uttar Pradesh, the largest wheat producing state, has suffered from above normal temperatures starting in mid-February, as seen in this display from Gro’s Navigator for Agriculture weighted for the state’s wheat growing areas. 

In addition, heavy rains have inundated Uttar Pradesh, along with Madhya Pradesh and Rajasthan, other big wheat growing regions. The extent of losses might take weeks to quantify. India’s wheat harvest is just getting underway and will continue through May. 

India’s rapeseed crop also could suffer damage from the unseasonable weather. India is the world’s largest importer of edible oils, and a decrease in its rapeseed production could force it to increase imports of other products including palm oil, soybean oil, and sunflower oil. 

The potential crop damage could exacerbate India’s domestic food inflation, which has been rising since 2021, as shown by Gro’s India Food Price Inflation Index. A jump in exports following Russia's invasion of Ukraine in early 2022 further pushed up local wheat prices, prompting India to ban exports last May. That move, however, failed to stop domestic wheat prices rising, particularly after last year’s crop was damaged by a late season spike in temperatures. 

The current wheat export ban is scheduled to be reviewed in early April, when government officials from food, farm and trade ministries are expected to decide whether an extension is warranted.

Nearby countries, including Bangladesh, the UAE, and Sri Lanka, normally rely on India for wheat imports. An extension of the wheat export ban could leave these and other countries scrambling for alternative supplies, although India said it will continue to consider individual countries’ requests to waive the export ban.

Gro users can view additional data on Gro’s India Wheat Yield Model & Balance Sheet, which includes charts on yield, trade metrics, and Gro’s India wheat supply & demand balance sheet.