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23rd Dec 2020

Rice exporting countries continue to face container shortages

Indian rice traders are seeking government support in transportation and marketing.


Rice exportIndian rice exporters are seeking government involvement to safeguard margins and remain competitive, as uncertain freight costs and shortages of containers are affecting the rice trade. VK Cowl, Executive Director of the All-India American Exporters Association said that rice exporters cannot absorb the increased shipping costs in their rice prices significantly for fear of losing business to other rice exporting countries. He also said that shipment on some routes has increased compared to pre-COVID time. Fees to West Asia, which accounts for 75% of the rice trade, increased about 243% from $1,200 to $1,500 per container after the blockade. While shipping rates to rice importing countries in the Caribbean have increased by 344% for the consignment of containers over the same period which now ranges between $4,200 - $4,500. Freight forwarders said there were 45-50% short of containers with monthly requirements of 30,000-35,000 MTS for both Basmati and Non-Basmati rice exports.

The US Export Association said the freight company had not completely deployed its fleet, thereby decreasing the availability of ships in Indian ports. BV Krishna Rao, president of the Kakinada association said that congestion at transshipment ports in Sri Lanka, Singapore, and Malaysia has delayed India’s cargo delivery to buyers based in rice importing countries. He also said that the discrepancy between India’s imports and exports has disturbed the availability of containers. Freight charges to Africa, India’s main rice export market, have doubled to $2,400 per 20 ft container. Their major concern is that their deals will transfer to other rice exporting countries, as well as the demand for white rice. They are only able to increase the price of parboiled rice by 8-10%.

Parboiled rice export maintained a neutral to bullish tone for the previous week while white rice export maintained a flat tone with bearish sentiments as limited demand is seen. Indian rice exports touched 1.16 Mn MTS for the month of November 2020. The demand is anticipated to continue its dominance on Indian rice for the time to come. Indian Government has procured rice paddy close to 37.5 Mn MTS and will continue to do so until another month.

Rice ImportIn Vietnam, rice export prices for 5 percent broken white rice increased to $500 per MTS from the previous week's $470-$490 per MTS. One rice trader said that the unavailability of containers has made it difficult for rice exporters to transport rice to their buyers. He also said that shipping rates for a 20-feet container to Africa, the major rice importing country have increased to $5,000 from $1,500 the previous month. Another rice trader said that Vietnam is not likely to meet its goal of exporting 6.5 Mn MTS of rice this year 2020. Vietnam government customs data showed rice exports in Jan – Nov’20 period decreased by 2.9% Y-O-Y to 5.7 Mn MTS.

Thailand rice export prices for 5 percent broken rice increased to $500-$519 per MTS from the previous week’s $485-$516 per MTS due to concerns over rice supplies and logistics. Fresh rice supplies have not arrived, while current rice supplies might not be shipped because of the shortage of freight containers, according to one rice trader. As per the Thai Rice Exporters Association, rice exports decreased to 4.49 Mn MTS from Jan – Oct’20, a decrease of 31% from a year earlier. 

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