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India's summer-sown rice output is likely to cross the previous year's level due to a pick up in monsoon rains, raising prospects for higher overseas sales in 2015 by the world's biggest exporter of the grain, trade officials said.
Robust exports from India could keep a lid on global prices that have surged 12% in the past three months and help cut bulging government stockpiles built as a result of bumper harvests over the past several years.
"There were concerns over production due to poor rainfall in June. The pick-up in rains from mid-July changed the situation. Now, the crop is in good shape," said B.V. Krishna Rao, managing director of Pattabhi Agro Foods Pvt Ltd, a leading exporter.
In June, monsoon rains were 43% lower than the 50-year average, raising concerns about output of the rice crop that guzzles a lot of water. But rains picked up in the past few weeks, narrowing the rainfall deficit to 11%.
"Overall rice production will definitely be higher than last year but it is a little early to quantify by how much," said Rajen Sundareshan, executive director of the All India Rice Exporters Association.
Indian farmers do the bulk of the rice planting in the rainy months of June and July, with harvests from October. The summer-sown variety accounts for the bulk of India's total rice output.
Farmers harvested a record 106.54 million tonnes of rice in the 2013/14 crop year, including an output of 91.69 million tonnes from the summer-sown crop.
Buoyed by attractive prices in the export market, farmers have planted more areas with aromatic basmati rice, as it needs less water and is more sturdy, said Rajeev Setia, executive director of Chaman Lal Setia Exports Ltd.
India and Pakistan exclusively grow the premium long-grain, aromatic basmati in the foothills of the Himalayas. Increasingly farmers are growing it in the northern plains.
The superior variety carries a premium over non-basmati, or common grades of rice. Basmati rice accounts for a tenth of India's total rice production.
India toppled Thailand two years ago to become the world's top rice exporter as a government intervention scheme priced Thai rice out of the export market and as Delhi lifted a four-year ban on non-basmati rice sales in 2011 to trim stocks.
But Indian exports slowed down from April as local prices hardened amid a cut in export rates by Thailand to trim its inventory. A bumper Indian harvest will moderate prices and make its grain competitive in the world market, exporter Rao said.
CHINESE APPETITE
Indian rice exporters are lobbying the government to persuade China to import non-basmati rice from India during the three-day visit of Chinese President Xi Jinping this week.
China is the world's biggest producer of the grain, but rising demand is forcing it to ramp up imports from Asian countries such as Vietnam, Thailand and Pakistan.
"China has signed protocols with other rice exporters like Vietnam and Pakistan. During Chinese president's visit we could sign the protocol with China," Rao said.
India had already signed a protocol with China for basmati rice export in 2006.
Traders believe India can export more than 1 million tonnes of non-basmati rice to China. "It has freight advantages over Pakistan," said an exporter, who did not wish to be identified.
