India’s export restrictions propel global rice prices: Asian exporters brace for Indonesia tender surge
By ANI
The Asian rice market is on edge as top exporters brace for a possible tender from Indonesia’s state purchasing agency, Bulog, in May. The surge in prices comes on the heels of Indian export restrictions, which have significantly tightened global supplies.
According to S&P Global Commodity Insights, India, the world’s largest rice exporter, implemented export restrictions, including banning broken rice exports and imposing additional duties on non-basmati white rice outflows in August 2022.
By July 2023, the Indian government further restricted non-basmati white rice exports, imposed a 20 per cent duty on parboiled rice outflows, and set a minimum export price for basmati at USD 950 per metric ton.
According to the US Department of Agriculture, India accounted for nearly half of the global rice trade in the marketing year 2022-23, with exports totaling 20.25 million metric tons, down 9 per cent from the previous year.
While India exports mostly parboiled rice to West African nations, its basmati rice is primarily shipped to the Middle East.
With India’s restrictions constricting the market, Asian rice exporters are eyeing Bulog’s potential tender in May.
So far in 2024, Bulog has announced four tenders, purchasing 1.4 million metric tons. Vietnam, Thailand, Myanmar, and Pakistan have been the top suppliers to Bulog this year.
Bulog has set an import quota of 3.6 million metric tons for 2024, down from last year’s 3.8 million metric tons, due to prolonged dry conditions attributed to the El Nino weather pattern, which reduced yields and output in Southeast Asia, tightening global rice supplies.
Exporters from various countries are anticipating a surge in rice prices with the upcoming Bulog tender. A Pakistan-based exporter noted, “Vietnamese and Thai rice prices are firming up as Bulog’s tender is around the corner [in May].”
Another exporter mentioned, “There are talks of a mid-May Bulog tender.”
Bulog’s tenders are welcomed by exporters, as they typically lead to price surges during purchase announcements. This demand-led price support provides more stability to the market than supply cuts, according to trade sources.
On May 6, Platts, part of S&P Global Commodity Insights, assessed Vietnamese 5 per cent broken white rice Free On Board (FOB) at USD 569 per metric ton, rising USD 5 per metric ton on the week.
Despite stagnant demand, global rice prices have risen in recent years due to dry weather-led supply cuts and restrictive government policies.
While El Nino-led drought conditions battered Asian rice fields, the market experienced another supply shock as New Delhi restricted exports.
El Nino is a climatic phenomenon characterized by warmer-than-average ocean surface temperatures in the central and eastern tropical Pacific Ocean.
Bulog did not immediately respond to requests for comment regarding its next tender announcement. However, exporters remain on alert, expecting further market volatility as the situation unfolds.
This article has been republished from The Economic Times.