The global rice market has turned precarious following India’s ban on white rice exports. It has totally become a seller’s market with prices of even cargoes in transit being hiked by $50-100 a tonne, said traders.

“No offers are coming from Thailand or Pakistan. Sales have not been happening for the past four days. For consignments in transit, prices have been raised by $50-100 and renegotiated,” said a trade source from Bangkok, on the condition of anonymity. 

Prices of consignments on sail are being raised with traders taking the risk of even cancelling it, said an Indian trader. 

Frantic calls from Gulf

“There are frantic calls from the Gulf seeking supplies of Sona Masuri or Ponni rice. They are enquiring as far as Singapore as traders there usually have six months stock. This means these rice varieties are commanding prices at par with Basmati,” said another trader.

This is because many Indian non-residents, especially from South India, rely on these varieties for their daily consumption. “The rice market has become precarious. Almost all traders are in a wait and watch mode but towards the middle of the week, we could see a significant rise in prices. Already, some varieties are quoted at $600 a tonne,” sadi VR Vidya Sagar, Director, Bulk Logix. 

Also read: Govt halts supply of subsidised rice for ethanol, assessing impact on EBP

The rice market is in turmoil after July 20 when India banned exports of white rice that makes up 40 per cent of its annual 17.5 million tonnes (mt) non-Basmati rice shipments. It has led to fears that the move could result in global food inflation with wheat prices rising after Russia backed out of the Black Sea Grain Initiative. The initiative ensure Ukraine wheat, sunflower and corn reached nations that depended on Kyiv supplies.

Resons for ban

The Indian government’s decision to ban white rice shipments came after the progress in the sowing of paddy was tardy. Though the acreage has turned positive, the Centre is wary about the damage caused by floods in rice-growing regions of Punjab and Haryana. 

In addition, its rice stocks have dropped to a six-year low with the Centre supplying rice instead of wheat to the poor through ration shops and rates of the cereal in the global market soaring to a five-year high. 

Research agency BMI, a unit of Fitch Solutions, said the Indian government’s decision to promptly ban white rice exports was the rise in food inflation during June.   

Also read: NRIs in US, Canada rush to stock up on rice after India’s export ban

Besides these factors, Thailand has said its rice production could be lower by 6 per cent this year due to the El Nino weather phenomenon affecting its paddy. Vietnam’s paddy crop will likely be hit by the weather factor, resulting in rice stocks being at a historic low, a Delhi-based analyst  said. 

Vietnam courts more buyers

“Most buyers are queuing up before Vietnam, whose offerings are lower than Thailand. Traders say it has received 20 per cent additional enquiries,” said S Chandrasekharan, a New Delhi based trade analyst.

Vietnam is not committing itself as it is getting ready to conclude a “big” deal with the Philippines. Hanoi will supply Manila an assured quantity to ensure its food security.

In return for this, Vietnam will access the Philippines market for its fruits, Chandrasekaran said. 

On the other hand, China has begun to aggressively scout for rice and this would put additional pressure on the market, Chandrasekaran said. 

Neighbouring Bangladesh has only 2 mt of rice stock and it has begun speeding up its purchases. “Though it needs parboiled rice only, its prices are rising after the Indian ban on white rice since some buyers are seeing it as an alternative,” he said. 

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