• Tuesday, July 23, 2024
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Indian rice exports to plunge as Thailand offloads stocks

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India’s rice exports will struggle to compete with cheaper cargoes from No.1 seller Thailand in 2015 as Bangkok looks to offload grain from its huge state stockpiles, industry officials and traders said.

B.V. Krishna Rao, managing director of leading Indian rice shipper Pattabhi Agro Foods Pvt Ltd, said the country’s exports could plunge by a fifth this year to 8 million tonnes, with some other industry officials in the country making similar warnings.

Lower exports will leave more rice in Indian hands, piling pressure on already-bulging storage and raising the spectre of grain getting damaged in temporary silos.

But competition among the world’s top two exporters will drag further on prices that have fallen 5 percent since the start of October. That’s good news for African nations like Nigeria and Senegal that are typically major buyers of Asian rice.

“The Thai government’s efforts to sell rice from its own warehouses has been putting pressure on global prices and limiting Indian exports,” said Rao.

Thailand will open a tender to sell around 1 million tonnes of rice in March, as it tries to shift over 17 million tonnes of rice built up under a controversial subsidy scheme. It aims to sell 10 million tonnes in 2015 and 7 million next year.

Indian exporters can compete with private Thai traders, but not with the government as it can cut prices to generate demand for old stock, said M. Adishankar, executive director at Sri Lalitha, a major rice exporter in southern India.

In the latest tender, Thailand sold 5-percent broken rice from old stocks for $236 to $378 per tonne, although the market price for new crops was around $415. India has recently offered the same grade at around $400.

“The government’s rice is old and has been stored for a long time so its value depreciates accordingly … there is always a price gap between new rice and old rice,” said an official at the Thai Rice Exporters Association, who declined to be identified.

India, which lost the top rice exporter spot in 2014, could see its shipments of non-basmati or common grade rice fall by nearly a quarter to 5 million tonnes in 2015, while exports of aromatic basmati could drop over 14 percent to 3 million tonnes, Rao said.

Basmati sales have also been hit after top buyer Iran suspended imports late last year to support local farmers, although one exporter expected shipments to restart in April.

Rice inventories at India’s state-run agencies had jumped to around 25 million tonnes by Feb. 1, nearly double the targeted level, government data shows.