Rice exports likely to surge on bumper output

Rice exports from India, the world’s second-largest producer, may more than double this year on a record crop and as importers seek alternatives to expensive supplies from Thailand, a shippers’ group said.

Shipments, including aromatic basmati rice, may total six million tonnes (mt) in the year ending March 31, compared with 2.2 mt a year earlier, said Vijay Setia, president of the All India Rice Exporters’ Association. Traders have exported more than 1.8 mt of non-basmati rice since India ended a three-year ban in September, he said.

Rising Indian exports may weigh on futures, which posted the first annual gain in three years in Chicago in 2011, and fill a shortfall in supplies from Thailand. Cheaper rice, staple for half the world’s population, may further cool global food prices, which dropped for a fifth month in November, according to the United Nations.

“Higher exports from India are pulling global prices lower,” Setia said. “India needs to ship value-added rice to get better prices.” Global rice harvest is forecast to rise three per cent to 480.4 mt in 2011, the United Nations’ Food and Agriculture Organization said December 8. Rice futures in Chicago gained four per cent last year after Thailand, the largest exporter, started a state rice-buying policy at guaranteed prices in October.

Thai exports
Thailand’s rice exports may drop to nine mt in 2012 from an estimated 10 million tonnes a year earlier as the government’s purchase boosts prices, Deputy Commerce Minister Poom Sarapon said December 23.

India won’t curb shipments as domestic stockpiles are comfortable, Food Minister K V Thomas said last week. State inventories climbed 16 per cent to 29.7 mt as of January 1 from a year earlier, the Food Corp. of India said on January 6. “India will not think of a ban until it fears that local prices are going to increase,” Ajay Jain, assistant vice president at Almondz Commodities Ltd, said in by phone in New Delhi. “The rice crop is good in India and other countries and the global prices may remain stable.”

Rough-rice futures for March delivery advanced as much as 0.7 per cent to $14.785 per 100 pounds on the Chicago Board of Trade on Monday and was at $14.705 at 9:26 am in Mumbai.

Shares gain
KRBL Ltd, India’s largest exporter, led shares of shippers higher in Mumbai trading. KRBL gained 8.8 per cent to Rs 16.15, Kohinoor Foods Ltd surged as much as 5.6 per cent to Rs 34.05, while LT Foods Ltd climbed 5.9 per cent to Rs 42.

Indian traders have contracted to ship 2.24 mt of basmati rice in the nine months through December 31, more than the 2.16mt a year ago, Setia said. The contracts may rise to 3.5 mt for the full-year, while actual shipments may be 2.5 mt, he said. Shipments fetched an average $968 a tonne in 2011 as against $1,110 a tonne a year earlier, he said.