India and China, which currently hold about half of the world’s wheat supply, are restricting exports of the grain, marking all their production for domestic consumption, in a bid to keep food inflation under control in the wake of the drought in the Black Sea area and floods in Pakistan’s Sind region. India and China each have approximately 60 million tonnes in wheat each under government stockpiles. The world’s most populous nations, are estimated to finish the 2010/11 crop year with a combined stockpile of around 78 million tonnes, 44 percent of the world total of 175 million, according to the U.S. Department of Agriculture.

“China will not export, as its own consumption is rising and if the country exports then domestic prices will rise immediately, which will push up inflation,” Ma Wenfeng, analyst at Beijing Orient Agribusiness Consultant told Reuters. Besides a huge population to feed, this years Chinese corn output has also been lower than expected, resulting in farmers using excess wheat stocks as animal feed.

India too which normally exports a few million tonnes to neighboring Nepal and Bangladesh as a goodwill measure is re-considering the favour. “India will not be selling much, as, just like China, they have a huge population and a very big demand,” Genichiro Higaki, head of the proprietary fund management team at Sumitomo Corp in Tokyo told Reuters. Both India and China witnessed bumper harvest crops this year, however since domestic consumption is so high, both nations are recluant to export to western markets for fear of pushing food inflation higher. Traders estimate some 1 million tonnes of Black Sea feed wheat sales to Asia are at risk.

U.S. benchmark wheat futures climbed to a two-year high last week, nearly doubling from June lows as wheat exporters remain adamant to sell even in such profitable markets. The tightening global wheat market has buyers worried of further price rallies as other nations such as Ukraine and Canada pull stocks from the global market for domestic consumption.