Chicago wheat futures soar 6% as India bans exports

Chicago wheat futures climbed by nearly 6% on Monday after India banned exports of the grain, an abrupt policy change that fanned concern about global supply strained by Russia's invasion of Ukraine.

India's embargo, prompted by a heatwave that has cut harvest prospects and sent domestic prices soaring, has hit hopes of record wheat shipments from the country in the coming year that would alleviate war-reduced supply from Ukraine.

The Indian export ban also comes as harsh weather, including drought in the southern U.S. Plains and parts of France, are reducing production potential in other major exporting countries.

"The situation is getting more complicated on the international market, with Saturday's decision by India," consultancy Agritel said.

The most active wheat contract on the Chicago Board of Trade (CBOT) earlier rose by its 70-cent daily limit, or almost 6%, to $12.47-1/2 a bushel, the highest level since March 9. By 0755 GMT it was up 5.3%.

Euronext wheat, the European benchmark, which reached contract highs last week to approach record levels set in March, is expected to rally in opening trade later on Monday.

Export curbs by India had been rumoured in recent days as the impact of the heat wave continued to grow, with many traders and analysts seeing the wheat crop falling below 100 million tonnes, compared with a reduced official forecast of 105 million tonnes earlier this month. 

Traders were assessing how much wheat would nonetheless be shipped from India, given the authorisation of existing export sales covered by letters of credit and government-to-government deals to meet food security needs. 

Egypt said on Sunday that it had agreed to buy half a million tonnes of wheat from India and the purchase would be exempt from the export embargo. 

In widely followed data last week, the U.S. Department of Agriculture (USDA) projected world stocks would decline to a six-year low in 2022/23.

In France, overnight storms brought some rain relief to parched crop belts but the country's main farm union said more regular precipitation was needed as cereal crops matured. 

Traders will be watching weekly U.S. crop data later on Monday for an update on wheat conditions and progress in corn and soybean planting, which has been delayed by cool, wet weather.

CBOT corn climbed 2.5% to $8.00-1/2 a bushel, while CBOT soybeans rose 0.9% to $16.60-1/2 a bushel.