Agri Business

Basmati exports in Jan-Feb may improve, still seen lower during FY22

Prabhudutta Mishra | | Updated on: Jan 24, 2022

Iran, Saudi may increase buying; shipments to be lower than 2020-21

Basmati exports are set to recover in January as Iran, Saudi Arabia, two major destinations, may increase their purchases. This comes after a drop in shipments for three consecutive months since the new crop arrived in October. Besides, the geo-political tension in Ukraine will likely boost shipments.

According to trade sources, exporters have signed about 0.25 million tonnes (mt) of contracts for shipments in first three weeks of this month, which is 70 per cent of the volume done in the entire month of January last year.

“Ramazan is starting from April 2 and Navruz on March 21. As Saudi Arabia and Iran buy during January-February for these festive demands, there may be good orders. Even if shipments match the year-ago levels in these two months, we will still carry the previous backlog. So, I do not see the target of 4.4 mt being achieved during 2021-22,” said Vijay Setia, former president of All India Rice Exporters Association.

Basmati shipments in 2021-22 (April-November) dropped by over 21 per cent to 2.4 mt from year-ago, which has been attributed to base effect of panic buying in 2020 after the Covid pandemic. Despite higher trading activities witnessed during April-November 2020, overall Basmati rice shipments recorded only a marginal four per cent rise at 4.63 mt during the 2020-21 fiscal.

Except Iran and Kuwait, Basmati exports to all other major destinations such as Saudi Arab, Iraq, Yemen, UAE, US, UK, Qatar and Oman increased during 2020-21, official data show. “Iran had curtailed imports in 2020 as it had good domestic crop as well as carry forward stock from the previous year. But its purchase improved in 2021 when there was a decline in other countries,” said an exporter. During April-November 2021-22, basmati exports to Iran increased by three per cent to 0.51 mt from the year-ago period.

In December 2021, the registration of exports contracts shows that there was five per cent fall in volume, whereas actual shipments may drop 15-20 per cent as some exporters have been re-negotiating deals with buyers after prices increased, sources said. In November 2021, there was five per cent drop in contracts registration while actual shipments declined 21.4 per cent at 2,38,121 tonnes from the year-ago period.

Trade sources also said currently, Basmati prices have increased to $980-990/tonne from $890-900/tonne in October 2021, whereas prices dropped to about $830/tonne in December 2020 from around $970/tonne in October 2020.

“We lost substantial basmati rice market in the European Union. Now, Pakistan and Iran have agreed to take measures to increase the annual trade exchanges to $5 billion by the year 2023 with tariff concession in rice. Further, the development of so-called new Basmati hybrid seed in Pakistan is a serious threat to our authentic appellation. India needs a concrete forward plan to promote genuine and original product in global market,” said foreign trade policy expert S Chandrasekaran..

Published on January 24, 2022
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