Thailand and Vietnam increased rice prices by $5-10 a tonne on Friday even as the global rice market switched to a “wait and watch mode” after India banned exports of (non-basmati) white (raw) rice with immediate effect on Thursday evening.

However, traders and analysts expect both rivals of India, the numero uno rice exporter, to increase prices by at least $50 a tonne when the market opens next week. 

Neighbour’s pride

“India’s envy, neighbour’s pride is what Indian rice export situation is. Prices will be up at least 10 per cent in the global market,” said Rajesh Jain Paharia, a New Delhi-based exporter. 

According to a Thailand trade source, prices of five per cent, 25, and 100 per cent Thai rice have gone up by $5-6 after the ban. “It has been difficult to get quotes today,” the source said, pointing to the “wait and watch” attitude. 

All grades of Vietnam white rice were quoted above $515 a tonne, while Pakistan rates were above $500 a tonne. Myanmar rice prices were also quoted above $500. 

“Prices could rise to $700 a tonne within a month and don’t be surprised if you see a 2008-like bullish run when the rates topped $1,000 a tonne,” a trade source said on the condition of anonymity. 

Impact spill-over

“There was not much activity in Thailand and Vietnam. But we expect prices to rise by $50-100 a tonne,” Jain said. 

“We have no idea as of now what Vietnam or Thailand are up to. But they will definitely hike the prices and we will see next week,” said VR Vidya Sagar, Director, Bulk Logix. 

The increase in rice prices will not be confined just to white rice. Parboiled (boiled) rice rates will likely increase as some countries may shift to that variety, whose exports are allowed. 

According to the Thai trade source, India’s parboiled rice prices shot up to $475-495 a tonne, up at least $30 a tonne. 

Food price inflation

“If white rice prices rise to say $650 a tonne and parboiled is available at $500, some consumers will definitely shift to the variety,” said the analyst. “Parboiled rice exports could be next in the line (for export ban),” he said.

Research agency BMI, a unit of Fitch Solutions, said the Indian Government’s decision to promptly ban white rice exports was “the June rise in the rate of Indian food price inflation to 4.5 per cent year-on-year”.

The Centre’s decision will have material implications for Indian inflation as well as substantial ramifications for trends in the global rice market, it said. 

S Chandrasekharan, a Delhi-based trade analyst, said on Thursday that despite India imposing 20 per centexport duty on white rice shipments in September 2020, they had gone up by 23 per cent.

‘Watch out mislabelling’

In addition, he said, white rice monthly exports since the beginning of the fiscal year had increased to over 5 lakh tonnes from around four lakh tonnes a year ago. During April-May this fiscal, nearly 11.5 lakh tonnes of white rice were shipped out of the country. 

“The government has now to ensure that no mislabelling of white rice is done as parboiled for exports. It has to also ensure that white rice is not pushed out as some cheap Basmati rice. The authorities have to be strict in enforcing the ban,” he said.

In addition, he suggested that the Centre fix a minimum export price for basmati shipments. 

Customs authorities got going in Chennai on Friday by not permitting idli rice as it is seen as single-boiled rice and not parboiled. Steamed rice shipments 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 norms, which the Indian ban will exacerbate. “In conjunction with India’s September 2022 ban on the export of 100 per cent broken rice, between 30 per cent and 40 per cent of India’s rice exports are now offline. In conjunction with the supply-side risks associated with El Niño, we expect the export ban to keep upside pressure on prices,” it said.

Rice prices had surged to a five-year high earlier this month on fears El Nino may affect rice production in Asia. Thailand was among the first to say that its rice production might be 6 per cent lower this year. “Vietnam production will also likely be hit by El Nino,” said the trade source.

In India, kharif paddy sowing has encountered different problems. One, deficient rains has affected sowing in key regions such as West Bengal, Andhra Pradesh, Chhattisgarh, Tamil Nadu and Karnataka. The second problem has been caused by floods in Punjab and Haryana, which forced the Centre to ban exports of white rice.

Tardy kharif 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 foodgrain prices. The move is also seen as a measure to overcome any supply shortage.

In addition to rise in white rice exports, at least three lakh tonnes of the rice were under-invoiced and exported below $300 a tonne since September 2022. Over the last two years, India has exported at least 17 million tonnes of non-basmati rice. 

The Centre’s decision came following tardy progress in kharif paddy sowing, which was 8.5 per cent lower than last year at 122.18 lakh hectares (lh) as of July 14.  

On the other hand, rice stocks with the Central pool maintained by the Food Corporation of India (FCI) dropped to a seven-year low of 25.34 million tonnes. The agency has an additional 23.3 mt of unmilled paddy (15.72 mt of rice).