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Market News
Indian rice prices gain as Asian nations gear up to tackle El Nino.
May 09, 2023
White rice (raw) prices have increased across Asia as some of the countries depending on the cereal as the staple food are building stocks to overcome any problem that might arise from the El Nino, which is likely to develop in the second half of 2023. 'Rice prices are up as countries such as Indonesia, the Philippines and Malaysia are looking to buy more rice,' said BV Krishna Rao, President, The Rice Exporters Association of India (TREA).
'There is more demand from islands around the Philippines. The Malaysia market too is open. We are getting enquiries from Vietnam too,' said VR Vidya Sagar, Director, Bulk Logix. 'Arrivals of the new crop are likely in Vietnam by this month-end. Buyers are asking us to expedite shipments,' said M Madan Prakash, President, Agri Commodities Exporters Association (ACEA).
'Countries such as Indonesia, the Philippines and Malaysia are stocking up to ensure they are not affected by the upcoming El Nino in any way. They don’t want to go through their 2007-08 experience when agri commodities prices exploded,' said S Chandrasekaran, trade analyst.
2007-08 crisis
In 2007-08, India banned rice exports resulting in the grain’s prices touching $1,000 in the global markets. According to the Food and Agriculture Organisation(FAO), an arm of the UN, it resulted in a crisis, harming the poor. 'If the government keeps up its support, we could end up exporting the same volume of rice like last fiscal,' said Rajesh Paharia Jain, a New-Delhi based exporter.
According to the International Grains Council, India’s 25 per cent broken white rice is quoted at $442 a tonne, while Thailand and Vietnam are quoting $490 and $480, respectively. Indian rice prices have increased 27 per cent year-on-year, more than Thailand (11 per cent) and Vietnam (16 per cent).
According to FAO, production of maize, rice and soyabean could be affected in the event of the El Nino developing.
Key development
The India Meteorological Department (IMD) has said El Nino will set in in the second part of the monsoon from August, while the Australian Bureau of Meteorology expects it to develop in July-end. The US Climate Prediction Center sees the event, which leads to drought in Asia and floods in the Americas, developing during May-June and strengthening further. 'One of the key developments in the global rice markets is that buyers have accepted the 20 per cent export duty on white rice,' said Jain, pointing to the 3 per cent rise in rice exports in the 2022-23 fiscal.
'These Asian countries are buying so that they will not be caught by any ban that India might resort to ensure food security as it did last year when it banned wheat and fully broken rice exports,' said Chandrasekaran.
'India will not sacrifice its food security, though it might take care of least developed countries’ needs,' he said.
Parboiled under pressure
'We are getting supplies of 25 per cent broken in Chennai at Rs.28,500 a tonne. Two weeks ago, we shipped at $430 a tonne cost and freight to South-East Asia. Prices have gone up further,' said ACEA’s Prakash. 'However, parboiled rice prices are stressed. There is no (Indian) government procurement so prices are falling,' said Bulk Logix’s Sagar.
White rice prices are gaining also because the Food Corporation of India (FCI) is procuring stocks for the central pool to be distributed through ration shops and to meet any food emergency.
FCI’s rice procurement topped 50 million tonnes (mt) last week and it is set to meet the 62.17 mt target for the current marketing year to September.
Record output
Indian parboiled rice prices are ruling below $380 a tonne in the global market in view of the slack demand. It is over $100/tonne competitive against Thailand and Pakistan.
Rice stocks until April 1 with FCI were at a five-year low and total foodgrain stocks, including wheat, were also at a five-year low mainly in view of wheat procurement being affected last year.
Lower wheat production resulted in its procurement being affected last year, while more rice was diverted to make up for distribution through ration shops.
India’s rice exports have been supported by record production of 130.83 mt (129.47 mt a year ago) of rice during the current crop year to June. Though kharif rice production dropped to 108 mt against 111 mt a year ago, the output was made up due to higher acreage in the rabi season.
thehindubusinessline.com
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