Indian summer heatwave began earlier this year, with the average maximum temperature across the country rising to 33 degrees Celsius in mid-March and April, the warmest recorded in 122 years. According to the Indian government, high temperatures have lowered Indian wheat yield potential for the 2021/22 season. India had been projected to produce a record crop in the 2021/22 marketing year, at 111.32 million tonnes. However, the heatwave has created uncertainty, and market participants are anticipating wheat output to fall by 6%-10% year-on-year below the initial estimate, limiting India’s wheat export capacity.
While India is one of the largest wheat producers globally, providing around 108 million tonnes last year, India exports only a small percentage of its harvest. This season, a larger proportion of Indian wheat was likely to be supplied to Europe, Africa and Asia to help the tight global wheat market, which has been partially caused by the Russia-Ukraine geopolitical conflict. However, this will be now under consideration due to the smaller potential yield caused by heatwave and the need to balance the domestic demand.
At a time of already elevated global wheat prices, the Indian production decline has added more pressure on global wheat prices. As a result, the Euronext wheat price increased by 10.5% month-on-month to EUR 360.4/MT in April.
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