High ocean freight may lead to slow start in rice exports

Vishwanath Kulkarni Bengaluru | Updated on April 09, 2021

Ocean freight rates have moved up by 50-60 per cent for both container and break bulk cargo   -  Getty Images/iStockphoto

Buyers turn cautious as Indian rupee also weakens

After record exports of around 12 million tonnes (mt) of non-basmati rice during 2020-21, exporters are confident of sustaining the trend this fiscal.

However, they see a slower start to the shipments in current fiscal as buyers have turnedcautious over the sharp increase in freight rates.

“In the new financial year, we expect to sustain the shipment trend witnessed in last year as the supply issues are seen continuing in other major producing countries. However, with the rise in freight rates, we see buyers adopting a wait-and-watch stance. As a result, there will be a slower start to shipments,” said BV Krishna Rao, President, The Rice Exporters Association. However, the shipments for the earlier contracts will happen in April, he said.

Ocean freight rates have moved up by 50-60 per cent for both container and break bulk cargo, due to which the share of freight costs in the total product cost of rice has increased significantly, Rao said. The demand continues to be there for the Indian rice as the supply issues are seen continuing in the other origins. Though there’s an improved crop in Myanmar, exporters are seen facing challenges due to the prevailing political situation. Also a weaker Indian currency is seen aiding the country’s exporters.

Rao further said that the availability of rice for exports in the country was likely to be lower as the Government has stepped up the procurement. “We may not have last year’s level of supplies due to higher procurement, which may result in slightly firm prices. We are expecting the average realisations to increase by about $20 per tonne from the last year’s average of around $370,” he added.

India — with total exports of around 16 mt — has been the largest player in the world rice trade estimated at 50 million tonnes.

Basmati exports

Basmati rice exports are estimated to be between 4.5 and 4.6 mt, said Vinod Kaul, Executive Director, All India Rice Exporters Association. Basmati rice exports, which had registered a growth of around 16 per cent in volumes till December, slowed down in January-February period due to shortage of containers and also due to higher ocean freight rates. “As a result, we expect a overall growth in shipments to be marginal at around 1 per cent over 2019-20,” Kaul said. India exported 4.5 million tonnes in 2019-20. About 90 per cent of the basmati shipments are done through containers.

Published on April 08, 2021

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