As prices of parboiled rice surge, export demand for India’s broken rice picks up

Subramani Ra Mancombu | | Updated on: Jul 05, 2022

Indian prices are still competitive over Pakistan, Thailand by over $40/tonne

The demand for Indian broken rice has increased after prices of parboiled rice surged over the past 10 days after the Centre raised the minimum support price (MSP) for paddy for the current crop year and Bangladesh cut the import duty on rice, according to exporters. 

For the current crop year that began on July 1, the Centre has fixed the MSP at  ₹2,040 a quintal — up ₹100 from last crop year. On June 22, Bangladesh cut the import duty on rice to 25 per cent from 62.5 per cent.  

 “Parboiled prices for exports have increased to $380-390 a tonne now from around $350 before Bangladesh lowered the Customs duty. This has resulted in some buyers like some from Djibouti seeking broken white rice instead of parboiled,” said VR Vidya Sagar, Director, Bulk Logix. 

Chinese demand

Despite the hike in prices, Indian parboiled rice is the most competitive in the global market. According to the Thailand Rice Exporters Association data, Indian parboiled rice is at least $40 a tonne lower than Pakistan’s offering.  

“Broken rice is in demand from China and South-East Asia too. Enquiries from South-East Asia are a tad lower in view of broken rice prices ruling higher than last year. China is buying broken rice but it could slow its purchases from next month as its crop is set to arrive,” said M Madan Prakash, President, Agri Commodities Exporters Association (ACEA). 

According to the US Department of Agriculture (USDA), Vietnam’s rice imports are likely to be 25 per cent lower as it is likely to cut its broken rice purchases from India. But China’s imports will continue at a record pace for feed purposes.

Better $ realisation

“Almost 100 per cent of broken rice consignments are currently heading to China. Prices are gaining due to higher US dollar realisation,” said Delhi-based exporter Rajesh Paharia Jain. 

Though Bangladesh has opened up its market for more imports through the duty cut, the USDA said purchases from India, its main supplier, would be weak. Still, it projects India’s rice exports at 22 million tonnes (mt) this calendar year.  

The Food and Agriculture Organisation (FAO) said though prices of rice increased for the fifth consecutive month in the global market in May, Indian rice was competitive as the arrivals from the Rabi harvest continued. 

“India is competitive since Indian exporters sell at $20-30 a tonne discount,” Jains said. 

‘No replacement”

BV Krishna Rao, President, The Rice Exporters Association of India (TREA), said broken white rice cannot replace parboiled in Africa. “Barring Senegal and Ivory Coast, no other African country buys broken rice. Even if broken rice rules higher than other varieties, they will buy this variety as they are used to it,” he said. 

He said parboiled rice prices generally tend to vary between $360 and $390 depending on whether it was the peak or lean arrival season. “Prices have been behaving this way over the last 5-7 years,” he said.

Rice prices have also gained on the increase in MSP for the current crop year. “The rise in MSP has resulted in open market prices increasing sharply,” said Bulk Logix’s Sagar. 

“Broken rice prices are ruling higher because in the domestic market it is being diverted as poultry feed,” said ACEA’s Prakash. 

Thailand’s rebound

According to the USDA, though India might export 22 mt of rice, Thailand will rebound as the number two exporter this year following a recovery in production. Thailand’s production is projected at 19.8 mt in view of a higher area under the crop’s cultivation.

Thailand’s rice exports had increased by 57 per cent during January-April this year at  2.29 mt with white rice making up 1.13 mt and parboiled 0.32 mt. According to the Agricultural and Processed Food Products Export Development Authority (APEDA), rice exports in April were lower at 1.35 mt against 1.68 in April last year. 

Rice exports were affected in April as the Centre focussed more on wheat exports, which increased by almost five times. However, wheat shipments were banned on May 13 after a heatwave affected the crop and the Food Corporation of India was able to procure less than 50 per cent of the 43.44 mt of the grain it procured last year. 

India’s rice exports have been buoyed by record production over the last six seasons with the output during 2021-22 being estimated at a record 129.66 mt. The FCI also had ample stocks of rice at 33.12 mt besides 24.7 mt of paddy (15.8 mt rice), which is much higher than the mandatory norm of 13.5 mt (11.5 operational stock and 2 mt of strategic reserve) as of July 1.

Published on July 05, 2022
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