After India’s ban on white rice exports, Thailand and Vietnam hike prices
Thailand and Vietnam raised rice prices by $5-10 a ton on Friday even as the global rice market went into “wait-and-watch mode” after India banned the export of white (non-basmati) rice immediately on Thursday evening.
However, traders and analysts expect both India’s rivals, numero uno rice exporter, to increase prices by at least $50 a tonne when the market opens next week.
Neighbor pride
“India’s envy, neighbors’ pride is the status of Indian rice export. Prices will rise by at least 10 percent in the global market,” said Rajesh Jain Paharia, an exporter in New Delhi.
According to a Thai trade source, Thai rice prices increased by 5 percent, 25 percent and 100 percent by $5 to $6 after the ban. “It was hard to get quotes today,” the source said, referring to a “wait and see” situation.
Prices for all grades of Vietnamese white rice were set at over $515/ton, while rates in Pakistan were above $500/ton. Myanmar rice prices have also been set at over $500.
“Prices can go up to $700 a ton within a month and don’t be surprised if you see an upward trend similar to 2008 when prices exceeded $1,000 a ton,” said a trade source, who asked not to be identified.
Spill effect
There was not much activity in Thailand and Vietnam. But we expect prices to go up by between $50 and $100 a ton.
“We have no idea yet what Vietnam or Thailand will do. But they will definitely raise prices and we will see next week,” said VR Vidya Sagar, director of Bulk Logix.
The increase in rice prices will not be limited to white rice only. Parboiled (parboiled) rice rates are likely to increase as some countries may switch to this variety, whose exports are permitted.
According to the Thai trade source, the price of parboiled Indian rice has increased to 475-495 dollars per ton, an increase of at least 30 dollars per ton.
Food price inflation
“If white rice prices rise to $650 a ton and parboiled rice is available at $500, some consumers will definitely switch to the variety,” the analyst said. “Parboiled rice exports could be next in line (for an export ban),” he said.
Research agency BMI, a unit of Fitch Solutions, said the Indian government’s decision to impose an immediate ban on white rice exports was “June’s rise in Indian food price inflation to 4.5 percent year-on-year.”
He said the center’s decision would have material implications for Indian inflation as well as significant implications for trends in the global rice market.
S Chandrasekharan, a Delhi-based trade analyst, said on Thursday that although India imposed 20 percent export duties on white rice shipments in September 2020, it rose by 23 percent.
‘Watch out for misnomers’
In addition, he said that the monthly exports of white rice since the beginning of the fiscal year have increased to more than 5 tons from about four tons last year. From April to May this fiscal year, nearly 11.5 thousand tons of white rice were shipped out of the country.
“The government must now ensure that white rice is not misclassified as parboiled for export. It must also ensure that white rice is not pushed around as some cheap basmati rice. The authorities must be strict in enforcing the ban.
In addition, he suggested that the center set a minimum export price for Basmati shipments.
The customs authorities started going to Chennai on Friday by not allowing it lethargy Rice because it is seen as parboiled rather than parboiled rice. Shipments of steamed rice are also expected to be curbed as a result, the trade source said.
El Nino factor
Research agency BMI said the global rice market remains tight by recent historical benchmarks, which will exacerbate the Indian ban. Coinciding with India’s September 2022 ban on the export of 100 percent broken rice, between 30 percent and 40 percent of India’s rice exports are now offline. In conjunction with supply-side risks associated with El Niño, we expect the export ban to maintain upward pressure on prices.
Rice prices jumped to a five-year high earlier this month amid fears that El Nino could affect rice production in Asia. Thailand was among the first to say its rice production could drop 6 percent this year. “Vietnam production is also likely to be affected by El Niño,” the trading source said.
In India, Kharif rice sowing has faced various problems. First, the lack of rain has affected agriculture in major regions like West Bengal, Andhra Pradesh, Chhattisgarh, Tamil Nadu, and Karnataka. The second problem was caused by floods in Punjab and Haryana, which forced the center to ban the export of white rice.
Tardi autumn sowing
On Thursday, the Indian government caught the global rice market by surprise, banning exports of white rice as part of its efforts to control rising prices of the food grain. The move is also seen as a measure to overcome any supply shortages.
In addition to the rise in white rice exports, there have been bills of at least three tons of rice less than $300 per ton exported since September 2022. Over the past two years, India has exported at least 17 million tons of non-basmati rice.
The center’s decision follows delayed progress in sowing the Khareef field, which was 8.5 percent lower than last year at 122.18 thousand hectares as of July 14.
On the other hand, rice stocks in the central complex maintained by the Food Corporation of India (FCI) fell to a seven-year low of 25.34 million tonnes. The agency has an additional 23.3 metric tons of raw rice (15.72 metric tons of rice).