Buyers look east as India imposes rice duty
INDIA’S restrictions on rice exports have paralysed trading in Asia, with buyers scouring for alternative supplies from Vietnam, Thailand and Myanmar where seller are holding off on deals as prices rise, industry officials said.
India, the world’s biggest exporter of the grain, banned shipments of broken rice and imposed a 20 per cent duty on exports of various other types last Thursday (8) as the country tries to boost supplies and calm prices after below-average monsoon rainfall curtailed planting.
Rice is the latest in a string of commodities that have faced export curbs this year as governments struggled to raise supplies and fight inflation amid trade disruptions triggered by the Ukraine war.
Rice prices have jumped five per cent in Asia since India’s announcement and are expected to rise further.
“Rice trading is paralysed across Asia. Traders don’t want to commit anything in a hurry,” said Himanshu Agarwal, executive director at Satyam Balajee, India’s biggest rice exporter.
“India accounts for more than 40 per cent of global shipments.
So, nobody is sure how much more prices will rise.”
Rice is a staple for more than three billion people, and when India banned exports in 2007, global prices shot to highs of around $1,000 (£870) per tonne.
India’s rice exports reached a record 21.5 million tonnes in 2021, more than the combined shipments of the world’s next four biggest exporters of the grain: Thailand, Vietnam, Pakistan and the United States.
Rice loading has stopped at Indian ports and nearly one million tonnes of grain are trapped there as buyers refuse to pay the government’s new 20 per cent export levy on top of the agreed contract price.
Though there are some buyers ready to pay higher prices for new contracts, shippers are sorting out pending contracts, Nitin Gupta, vice president for Olam India’s business.
As Indian exporters stopped signing new contracts, buyers are trying to secure supplies from Thailand, Vietnam and Myanmar, which have raised the price of five per cent broken white rice by around $20 (£17.40) per tonne in the past four days, dealers said.
But even these suppliers are reluctant to rush for contracts as they are expecting prices to strengthen. We expect prices to rise further,” a trader based in Ho Chi Minh City said.