MUMBAI (Reuters) – A ban on Indian rice exports has the global market bracing for similar action by rival suppliers to avert potential domestic shortages as sellers try to fill the 10 million metric tons gap left by New Delhi, raising concerns about the already global rally. Food inflation.
Analysts say India’s recent restrictions are nearly identical to those imposed in 2007 and 2008, creating a domino effect as many other countries have had to limit exports to protect domestic consumers.
This time around, the impact on supplies and prices could be more sweeping, with India now accounting for more than 40% of global rice trade compared to a share of 22% 15 years ago, increasing pressure on rice-exporting countries such as Thailand and Vietnam to follow suit.
“India is now more important to the rice trade than it was in 2007 and 2008. The Indian ban at that time forced other exporters to apply similar restrictions in a domino effect. Even this time, they have no options but to respond to market forces,” said a grain trader. He is based in New Delhi and has a global trading house on condition of anonymity.
The impact on prices of the world’s most consumed staple has been rapid, reaching a 15-year high, after India surprised buyers last month by imposing a ban on sales of the widely consumed non-basmati white rice to curb rising prices. New Delhi had already restricted supplies of broken, low-quality rice in 2022.
Analysts and traders said limited supplies risked another rise in rice prices, and global food price inflation, hitting poor consumers in Asia and Africa. Food importers are already struggling with tight supplies due to volatile weather and disruption to Black Sea shipments
“Thailand, Vietnam and other exporting countries are ready to step up their game, all in a bid to fill the gap created by India’s shortage,” said Nitin Gupta, senior vice president of Olam Agri India, one of the world’s largest rice exporters. .
“However, there are limitations in their export surplus capacity. This limitation could pave the way for higher prices from other sources, reminiscent of the notable price hikes we witnessed in 2007/08.”
In 2008, rice prices hit a record high above $1,000 a ton after India, Vietnam, Bangladesh, Egypt, Brazil and other small producers restricted exports.
Limited surplus
Three traders with international trading houses told Reuters that rice exporters this time will not be able to increase exports by more than 3 million metric tons annually in an attempt to meet domestic demand amid a limited surplus.
Thailand, Vietnam and Pakistan, the world’s second, third and fourth largest exporters, respectively, said they were keen to boost sales since demand for their crops soared after the Indian ban.
Both Thailand and Vietnam have confirmed that they will ensure that domestic consumers are not hurt by increased exports.
“It is unacceptable for a rice-exporting country to face tight supplies and high domestic prices,” Vietnamese Minister of Industry and Trade Nguyen Hong Dien said last week.
Pakistan, which is recovering from last year’s devastating floods, could export 4.5 million to 5.0 million tons from the current year’s 3.6 million tons, according to an official of the Rice Exporters Association of Pakistan (REAP).
But the official said it was unlikely the country would allow unrestricted exports amid double-digit inflation.
Major importing countries of non-basmati rice include the Philippines, China, Senegal, Nigeria, South Africa, Malaysia, Côte d’Ivoire, and Bangladesh.
chain reaction
Global prices have risen about 20% since India’s ban. Another 15% increase could prompt restrictions from Thailand and Vietnam, according to traders at IBC.
“The question is not whether they will limit exports, but how much they will restrict it and when they will take such measures,” said a New Delhi-based trader.
This week, rice prices in Thailand and Vietnam rose to 15-year highs as buyers scrambled to cover shipments to make up for the drop in India’s exports.
El Nino fears
Rice is a staple for more than 3 billion people, and nearly 90% of the water-intensive crops are grown in Asia, where the onset of dry El Nino weather threatens yields in major producing countries.
After below-normal rains in June and July, Thailand advised farmers to reduce the area planted with the second rice crop.
In India, the irregular distribution of monsoon rains has led to flooding in some northern rice-growing states, even as some eastern states lack the rainfall to start cultivation.
PV Krishna Rao, president of the Rice Exporters Association of India, said good monsoon rains were needed for normal production, which would allow New Delhi to roll back the ban on exports.
Rao said that only Indian supplies can restore balance in the global rice market.
“We will have to see how long India’s restrictions remain in place. The longer the ban lasts, the harder it will be for other exporters to make up the shortfall,” said Peter Klopp, an analyst with the International Grains Council (IGC). ) in London.
Reporting by Rajendra Jadhav; additional editing and reporting by Naveen Thukral in Singapore; Additional reporting by Khanh Phu in Hanoi, Banarat Thipjumbanat and Chayote Setbunsareng in Bangkok; Edited by Shri Navaratnam
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