Indian rice prices up 10% in global market, affect export demand
Indian rice prices have risen about 10 percent over the past two weeks in the global market, but remain competitive with grain prices from other origins. However, higher prices dried up demand for exports.
“Indian rice prices have increased by 5-10 percent recently, but this is the usual case during the lean season from July to September,” said B. V. Krishna Rao, President, Rice Exporters Association of India (TREA).
He said that the prices of parboiled rice, which is required from Vietnam and African countries, rose from levels of 380-390 dollars per ton to 430 dollars per ton.
Business is boring
Traders said that the main reason behind the increase in rice prices was the high price of rice or reports of its unavailability.
There seems to be a shortage of rice, especially in the south, which is driving up prices. “There is still no parity rates for rice compared to rice,” said S Chandrasekaran, a Delhi-based business analyst.
“Last week, we previously bought rice at Rs 29,000 per ton, but now it is Rs 30,500,” said VR Vidya Sagar, Director, Bulk Logix. White rice prices increased by 5 percent by at least $25 per ton to $490 levels.
“There is no business happening where buyers see prices as high. There are only inquiries for cheap rice from Singapore and East Timor,” said M Madan Prakash, president of the Agricultural Commodity Exporters Association (ACEA).
A trader from North India said that rice prices are rising every day, especially in states like Chhattisgarh – a phenomenon not seen in the past few years. “The amount of rice available is also less,” he said. Rice shortages have been reported from centers like Thoothukudi in Tamil Nadu.
Fear factors
Despite these developments, research agency BMI, a unit of Fitch Solutions, lowered its average rice price forecast to 2.9 percent for CME-listed second-month raw rice futures in 2023. The price forecast was lowered from $17.30 per ton (one hundredth of a weight or 45.35 kg) to $16.80.
“Prices have gone up due to fears of floods affecting rice production in northern India and lack of rainfall which has reduced the area under grain during the current autumn sowing,” Sagar Polk Logics said.
Sona Masuri, Ponni or idli rice has soared above $650. “Prices of sona masoori and other types of rice have risen from US$550 to high levels not seen in the recent past. Prices of these types of rice are usually stable,” said ACEA’s Prakash.
A section of the trade blames the Chhattisgarh government’s move to raise the minimum support price (MSP) for rice to $2,800 quintals for price hikes.
Reflects the new MSP
TREA’s Rao said that rice prices are starting to reflect the MSP set by the center for the 2023-24 (July-June) crop year. The MSP for rice has been increased to ₹2,183 quintals for the common variety from ₹2,040 last year.
However, the consensus among traders is that prices may start to fall from September onwards.
Research agency BMI has forecast that the global rice market will slump during the 2023-24 season, going from an estimated deficit of 9.9 million tonnes (metric tons) in 2022-23 to a narrow one-tonne deficit. But the “now confirmed” El Nino could pose a risk and support prices in the meantime.
Despite these developments, the US Department of Agriculture has estimated that India’s rice exports will rise to 24 metric tons in the 2023-24 (September-August) marketing season. It also predicted rice production in India would reach 134 metric tons compared to the record of 136 tons this season.