Rice

India’s Rice export prices dropped this week to their lowest since December 2016 as a weaker rupee allowed traders to reduce rates amidst rising domestic rice supply from fresh harvests. One rice trader said that India has again become competitive in the international rice market. Rice exporters believe this market improvement will favor trades for the near term as well as rice export demand at this point have a good maturity advantage.

India’s competitive rice export prices

Foreign exchange continues to favor rice export pricing.

Indian sugar traders are still waiting for international sugar prices to increase to enter further export deals, as per the trade body ISMA. Due to the drop in international raw sugar prices, not many export deals occurred in the last one month, further than the 38-40 lakh MTS of export agreements that have already been signed. Indian Sugar Mills Association (ISMA) also stated that, given that roughly 9 months are remaining for the present season, sugar traders are still waiting for the appropriate time to enter further trade contracts. During the October-November period of the current 2021-22 season, sugar exporters traded around 6.5 lakh MTS, higher than 3 lakh MTS in the year-ago period.

Sugar exporters anticipate global sugar price hike

Indian sugar exporters are still waiting for the right period to enter further export deals.

Sea freights for containers have begun increasing once again after remaining stable for the last quarter of 2021, increasing 10 percent in the 1st week of January 2022 resulting in new uncertainties for agricultural commodity traders. One rice exporter said that the waiting time of deliveries at ports has also soared to more than a month from 15 days. Indian non-basmati rice in the international market witnessed a bullish turn over the course of the week. The strengthening of the Rupee combined with trade aversion fears has led to this bullish sentiment. Rice export movements have remained negligible with challenges to only complete previously closed agreements. Rice exporters have also stated that correctional actions may seep in post-elections which are due in February 2022 across major states of India.

Rising ocean freights imposes a challenge for rice exporters

Indian rice traders worry over surging freight rates.

According to the industry body, Indian Sugar Mills Association, the country's sugar exports during the period of October to December 2021 increased nearly four-fold to 17 lakh MTS on greater international demand. ISMA also added that 38-40 lakh MTS have been contracted by sugar mills for exports. Sugar Millers are now waiting for global prices to improve for more deals. India’s sugar marketing period is from October 2021 to September 2022. ISMA Stated that, as per market reports and port data, about 17 lakh MTS of sugar have been physically exported throughout the period of October to December 2021. During the same period in the previous year, an estimated 4.5 lakh MTS of sugar were traded.

India sugar export increased nearly four-fold during the period of Oct'21-Dec'21

India’s sugar production reached 11.6 million MTS up until the end of December 2021.

Shipping prices have begun increasing again due to another wave of COVID-19, a sudden rise in crude oil prices, and an immense bottleneck at several ports in China, the United States, and Europe. Industry sources estimate a 15% to 20% increase in sea freight costs for outbound cargo from Asia to the North American or European countries due to unforeseen delays in cargo clearance at various ports. In Asia, trans-shipping ports in Singapore and Hong Kong are immensely congested with many vessels waiting to take dock for their re-route. With this rise, the average export cargo price for a 40-foot container from Mumbai, India is estimated at USD $4,900 and that from Mundra and Chennai at USD $5000 and USD $5200 respectively. International shipping rates had reached a record high in November 2021 but were reduced later due to a decreasing number of new COVID-19 Cases.

Rice exporters face new challenges with rising shipping costs and congestions

Seaports worldwide continue to be congested as they clear backlogs of shipping containers stuck on harbors.

Indian sugar exports may possibly reach a record high of 7.5 Mn MTS in the current marketing year 2021-2022 as against the estimated 6 Mn MTS. However, sugar traders do not anticipate a significant rise in local sugar prices. A rise in the volume of sugar diverted to ethanol production has led to a shortage worldwide which Indian traders are fulfilling. As per Sudhanshu Pandey, secretary, Department of Food & Public Distribution Indian sugar export is anticipated to increase.

Indian Sugar sees an aggressive demand in the international market

A rise in the volume of sugar diverted to ethanol production has led to the increase of Indian sugar export.

Rice export prices for 5 percent broken parboiled rice varieties from India, increased to $371-$378 per MTS from the previous week's $370-$376 per MTS. One Indian rice trader said that rice buyers are aiming to stockpile due to the increase in wheat and corn prices and hence the demand is increasing for rice.

The increasing rice export prices across the globe

Major rice exports markets see a bullish run on high demand.

India is ready to meet any additional requirement for wheat from buyers in Asia, and from countries in Europe, the Middle East, and North Africa. Ukraine is being one of the major producers of wheat, but exports have been disturbed since the Russian invasion in February 2022. Senior civil officer at the Ministry of Consumer Affairs, Food and Public Distribution, Sudhanshu Pandey said that the Indian market has adequate supplies, and India is in a secure position to fulfil requirements from wheat importing countries.

Global demand for Wheat on the rise

India estimates export opportunities to meet the global deficit.

India may consider export limitations on rice after wheat and sugar to safeguard sufficient local supplies and avoid increasing prices. A committee headed by India’s Prime Minister's Office is undertaking a product-by-product analysis of essential products including non-Basmati rice and swift measures are expected if there are any signs of a price increase. An official stated that Inflation is being tackled at the highest level. The price monitoring committee meets on every product and determines the course of action.

The Indian government may reduce rice exports

India may consider prohibiting rice exports after wheat and sugar to ensure sufficient local supplies.

The global sugar rates continue to remain strong, Indian sugar industry body Indian Sugar Mills Association (ISMA) has asked the Central Government to announce approval for the export of 80 lakh MTS of sugar in the 2022-23 season. In a letter written to Food Secretary Sundhanshu Pandey on June 10, 2022, ISMA has said that the abrupt announcement of next year’s sugar policy will help the sugar mills enter future contracts at reasonable rates. ISMA has requested the government to evaluate the current sugar export policy and permit the export of at least 80 lakh MTS of sugar under Open General License (OGL) through the next sugar season starting October 1, 2022.

ISMA urges to allow sugar export of 80 lakh MTS

India’s sugarcane plantation in the 2022-23 season is expected to be around 2% higher than the current year.

According to the United States Department of Agriculture (USDA) rice outlook report published last July 2022, Vietnam is anticipated to buy huge quantities of rice once again with imports estimated at 1.1 million MTS for 2022. Although lower from the record set in 2021 at 1.8 million MTS, rice demand for Cambodia and India rice remains strong amid high local rice prices. Demand for broken and milled rice from India also continues to stay strong. Imports peaked at the start of 2021 due to the gap in prices between Vietnam and India for all types of rice, affected by high internal transit costs in Vietnam. India has been the world’s major rice exporter in the last decade — export revenues rose to $ 8.8 billion in 2020-2021 and $9.6 billion in 2021-2022.

India's rice exports see a rising trend due to weak global supplies

Major players Thailand and Vietnam dealing with cost pressures.

India's sugar exports are expected to weaken by 28.57% at around 8 million MTS in the 2022-2023 season on projected lower initial balance supply and greater diversion for ethanol, as stated by a food ministry official.

India: Sugar export volume anticipated to decrease due to low supplies

New sugar season starts from October 2022 to September 2023.

Non Basmati

India

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Swarna

100% Broken

IR 64 5% Broken

IR 64 25% Broken

Parboiled

IR - 64/36 5% Broken

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Rice - Non Basmati (India)

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