Indian rice exports slow as Middle East war pushes up freight and insurance costs
By Rajendra Jadhav
Rice exports from India are slowing as the U.S.-Israeli war on Iran pushes up freight and insurance costs, making it harder for exporters to secure vessels, five exporters told Reuters.
India, which accounts for more than 40% of world rice exports, usually ships more than the combined exports of the next three biggest suppliers – Thailand, Vietnam and Pakistan.
Rising freight rates are alarming both buyers and sellers, leading to a significant slowdown in the signing of new export deals, said Nitin Gupta, senior vice president at Olam Agri India.
“Freight rates are rising every day. Shippers are adding war surcharges and emergency fuel surcharges (EFS), making imports increasingly expensive for buyers,” Gupta said.
Shipping insurance and freight rates have been rising since maritime traffic along the narrow Strait of Hormuz all but halted more than a week ago. The disruption to 20% of the world’s oil shipments has raised global energy prices, including bunker fuel prices.
Exporters of non-basmati rice are currently executing old orders, and loading of berthed vessels is proceeding smoothly, but they are facing difficulties arranging logistics for new orders, said Himanshu Agrawal, executive director at rice exporter Satyam Balajee.
“Importing countries are holding ample stocks, with a good amount still in transit, so there are currently no panic purchases from buyers. They are waiting for the dust to settle,” Agrawal said.
India mainly ships non-basmati rice to markets such as Bangladesh, Benin, Ivory Coast, Guinea and Cameroon, while its premium basmati rice predominantly goes to buyers in Saudi Arabia, Iraq, Iran and the United Arab Emirates.
Shipments of Indian basmati rice destined for major Middle Eastern markets, including Iran, Iraq, Qatar, and Saudi Arabia, have been halted in transit due to the effective blocking of the Strait of Hormuz, said a New Delhi-based exporter.
“Sellers … do not know when vessels will be unloaded or when they will receive payment,” he said.
India’s rice production jumped to a record high this year.
Mukesh Jain, an exporter, said it had enough to meet export demand, and that the rupee’s depreciation was also helping, but that the logistical bottlenecks were deterring the signing of new contracts.
This article has been republished from The Reuters.