Rice exports from India, the world’s second-largest grower, may decline this year from a record as buyers turn to cheaper supplies from Vietnam and Pakistan, according to a traders’ group.
Shipments may fall 6 percent to 9.5 million metric tons in the year that started in April from 10.1 million tons a year earlier, said Vijay Setia, a former president and member of the All India Rice Exporters Association. Exports of non-basmati rice are estimated to drop 15 percent to 5.5 million tons, while overseas sales of aromatic basmati variety are set to jump 14 percent to 4 million tons, he said.
India’s government raised the minimum price it pays to growers to a record last year, making supplies from the country more expensive amid a global glut. Thailand’s plan to sell grain from state stockpiles may further depress prices, which are set for a second quarterly advance, said B.V. Krishna Rao, managing director of Pattabhi Agro Foods Pvt., an exporter.
“The government support mechanism is so strong in India that it’s difficult to match Vietnam and Pakistan,” Rao said by phone from Kakinada in Andhra Pradesh. “With the rupee falling to a record low, exporters have been forced to cut prices” and non-basmati shipments may slump to as low as 4 million tons should Thailand cut its export prices, he said.
Rupee Slump
The price of Indian parboiled rice, which accounts about 50 percent of the non-basmati exports, has been cut to $415 a ton from $435 a month earlier to cope with increasing competition, Rao said. Vietnam is offering 5 percent broken white rice at $370 a ton, while the Indian variety costs $440, he said. Thailand’s rice is at least $50 more than India, he said. India exports mainly to the Middle East and Africa.
Rough-rice futures for delivery in September on the Chicago Board of Trade was little changed at $15.56 per 100 pounds at 8:51 a.m. in Mumbai today. The rupee, which slumped about 10 percent this quarter, dropped to a record low of 60.765 per dollar on June 26.
The forecast for above average monsoon rainfall may boost planting of basmati rice in the main growing regions, Setia of the exporters’ association said.
“There is a heavy rush to buy basmati seeds in Punjab and Haryana and sales are estimated to have doubled from last year,” he said. The basmati rice production may rise to 8 million tons from 6 million tons a year earlier, he said.
India controls 65 percent of the overseas basmati market, while the only other producer Pakistan accounts for the rest, according to the state-run Agricultural and Processed Food Products Export Development Authority.
The monsoon, which accounts for more than 70 percent of India’s annual rainfall, was 37 percent above a 50-year average between June 1 and June 26, according to the weather bureau. The nation will receive normal rains during the June-September period, India Meteorological Department said June 14.
Source:-www.bloomberg.com
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