Rice

Indian parboiled rice markets witnessed a flat tone for most of the week as deals continued to be limited to East African rice importers. Local rice markets witnessed a major increase in prices while the market in Bengal remained neutral. Indian white rice markets witnessed limited movement for most sectors as container availability was seen to be exceptionally low.

Indian rice touches new destinations

India's overall exports of non-basmati rice have seen a sharp spike in 2020-21.

Bangladesh has floated a tender to buy 50,000 tonnes of non-basmati rice from India, adding to the increasing international demand for rice and boosting hopes that this fiscal year will be excellent for Indian rice traders. Vinod Kaul, executive director of All India Rice Exporters Association (AIREA) said that the move indicates a good way for the country's non-basmati rice export. Adding that Bangladesh is likely to buy the 50,000 MTS of rice through the National Agricultural Cooperative Marketing Federation of India (Nafed). Kaul added that the rice demand from rice importers from Africa and China for India's non-basmati rice is also robust, and that overall non-basmati rice exports may possibly break last 2020 statistics if the trend continues. India saw a rise in rice exports in FY21, a pandemic year. The rise was pushed by record-high sales of rice-13.9 MM MTS of non-basmati and 4.6 MM MTS of basmati.

Bangladesh has announced a tender to buy 50K MTS of non-basmati rice

India saw a rise in rice exports in FY21, during the pandemic year.

Rice export from Pakistan is projected to rise to a record in 2021 because of abundant production by the world's fourth-largest rice exporter, having a weaker local currency, and Russia’s move to resume rice import. Food security commissioner from Pakistan’s national food ministry, Syed Waseem-ul-Hassan, said that Pakistan has gained entrance to the Russian market, and Pakistan rice exports to that region will increase by as much as 200K MTS. He also added that total rice exports are estimated to increase from 10% in 2020 to 15% in 2021 as the government also aims to boost rice exports to regions like Africa. Malik Faisal Jahangir, senior vice chairman of the Rice Exporters Association of Pakistan said that the reopening of rice exports to Russia is a milestone. Four members of the group have already complied with the Russian milling standards, and many more compliant units will be added this 2021. According to Pakistan government data, local production is expected to rise 13.6% to an all-time high of 8.4 MM MTS by June 2021.

Pakistan projected to harvest 8.4 MM MTS of rice

Pakistan to boost rice exports.

All India Sugar Trade Association (AISTA) said that sugar mills have exported 4.75 MM MTS of the sweetener so far in the ongoing basis for 2020-21 marketing year ending September, with maximum exports to Indonesia. Sugar millers have signed to export 5.9 MM MTS of sugar so far as against the 6 MM MTS allocation designated by the food ministry in January 2021. An additional 0.43 MM MTS of sugar has been contracted under OGL (open general license) method without subsidy support. Furthermore, sugar export to Iran has begun even in small quantities. About 6,982 MTS were shipped to Iran in June 2021. AISTA said it does not anticipate any significant increase in the export of sugar to Iran in the current period, as they need raw sugar.  AISTA added that Indian sugar exporters are not able to trade raw sugar to them at this time, as the present season has closed.

Traders see a bright prospect in Indian Sugar

India exported 4.75 MM MTS of sugar as of ongoing M.Y 2020-21.

The Punjab Rice Millers and Exporters’ Industry is alarmed over increasing logistics costs by more than 50 percent for shipping the export cargo to ports in Gujarat and Maharashtra thereby disturbing the rice export. The association has appealed to the district administration and the police officials to mediate and disband such truck unions, allowing the free movement of goods throughout the country. The association said Amritsar alone reported over 1,000 trucks every month containing basmati and non-basmati rice shipment to various parts of the country and for exports. Because of the COVID-19 pandemic, some cargos are left stranded in the port. Moreover, some cargos are not reaching up to the port due to the increase in rice prices. On the other hand, even though retail giants are facing issues, they are manageable. However, small companies are encountering the rage of the disturbed supply chain. For example, rice exporters who cannot afford cargo delays must pay 3 times the standard freight prices. Overall the disruptive supply chain leading to price hikes has to lead to an alarming situation for rice exporters in India as well as other rice exporting countries.

Higher freight charges impacting rice price

Logistics costs increased by over 50 percent.

Indian sugar traders for the first time have signed sugar export deals 5 months in advance of cargoes due to a likely drop in Brazil's production. This has also triggered sugar buyers to safeguard supplies from the South Asian country in advance. Sugar production in Brazil, the world's largest producer and exporter of sugar, is set to drop and the effect might continue until 2022 - after 3 frost incidents hit crops in the nation's center-south region in June and July 2021.

Indian sugar traders take advantage as frost hits Brazil

Brazil sugarcane crop has been damaged due to unusual frost.

Indian Non-basmati rice had an extraordinary increase in export, which gained more foreign trade than Indian basmati rice. In ‘20- ‘21, India traded internationally 13.09 MM MTS of non-basmati rice (USD $4.8 Bn), up from the usual 6.9 MM MTS (USD $2.7 Bn) prior to the last 5 years. The export of Indian basmati rice in ‘20- ‘21 (4.63 MM MTS at $4.02 Bn) followed the trend of ‘15- ‘20 5-year average (4.19 MM MTS with revenues estimated at $3.98 Bn). This growth in the export of non-basmati rice took place despite a massive increase in the procurement (at minimum funding price, in the form of rice paddy) by the government in ’19- ‘20. The rice buying increased from a 5-year average of 41.2 MM MTS to 58.6 MM MTS in ‘20- ‘21 (the difference between Kharif marketing season and financial year is not accounted for). The average unit price achievement per MTS of non-basmati rice was USD $366.5 in ‘20- ‘21 compared to USD $391.6 in the prior 5 years. Indian Rice is still cheaper than other rice exporting countries by $40-$50 per MTS.

Non-Basmati rice is changing the Indian rice export landscape

Despite the COVID-19 pandemic, India’s agricultural exports flourished during ‘20-‘21.

Pakistan-China Joint Chamber of Commerce and Industry (PCJCCI) President SM Naveed said that considering the excess after reaching yearly local rice consumption of 2.5 MM MTS, Pakistan is prepared to export 3.75 MM MTS of rice to China. He also stated that China had become one of the major rice buyers of Pakistan rice, as shown in rice paddy export data over the last 2 years which shows 244% growth. The PCJCCI had introduced a push to double exports to China within a year.

Pakistan exporters see long term opportunity in China

China has become one of the top destinations for Pakistan rice export.

High sea freight rates, non-availability of containers, and a price decrease in rice rates by Vietnam and Pakistan are expected to impact rice traders from India in the period of 2021-22. One rice trade expert stated that even though rice exporters have signed advance contracts of 1-1.2 MM MTS monthly until November 2021, overall rice exports are likely to be lower at around 12 MTS. Increasing freight rates was turning into the main challenge for rice traders apart from increasing logistic bottlenecks at ports, said B V Krishna Rao, president of Rice Exporters Association. Rao also stated that the Indian non-basmati rice exports depend on Indian Railways for interstate logistics as Kakinada port is the main shipment port for non-basmati rice sourced from Chhattisgarh, Maharashtra, and Orissa regions to fulfill the shipments. Furthermore, Vietnam which became a major rice buyer in 2020 has stopped procuring rice from India starting May 2021. Vietnam rice importers are requesting discounts for the release of the shipment.

Increasing freight rates are affecting the global rice trade

High freight rates are turning into a major challenge for exporters.

India rice export trade witnessed a flat to bullish tone for the last week, as rice export prices were affected as the local exchange fluctuations boosted the Rupee. Rice exporters have revealed the volatility in terms of new fixtures which will affect rice export prices for the short term. Domestic rice markets will continue to be stable on account of limited purchasing.

Rice import across the globe

Rice importing countries continue to purchase rice for stockpiling.

Indian rice traders maintained a neutral tone for the near term as most rice trading countries are encountering a shipping crisis followed by law-and-order uncertainty at the destination. Rice buying demand is good from West Africa but shipment lead times and related delays on account of container/vessel volatility have depressed the market extensively over the last 3 weeks. East African rice traders continue to be neutral as purchasing positions are not firm for the near period.

Outlook of rice trade across the globe

Rice exporting & importing countries are facing a shipping crisis.

India sugar exports, the world's 2nd largest sugar producer, might restrict a rally in international sugar export prices that reached 4.5 years high in August 2021 as sugar exporters started scaling down that estimated Brazil's production due to bad weather. The Indian Sugar Mills Association (ISMA) stated that India may possibly export 6 Mn MTS of sugar in the upcoming marketing year as the international sugar shortage is set to aggravate this year 2021 because of lower sugar production in Brazil. ISMA said that the country can export a record of 7 Mn MTS for M.Y ‘21/’22, banking on a government grant for foreign sales.

The increasing demand of Indian sugar export

Indian sugar traders have signed contracts to export 1.2 Mn MTS for M.Y '21/'22 that starts from Oct. 1.

Non Basmati

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Rice - Non Basmati (India)

Rice - Non Basmati (Pakistan)

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