Indian Rice Prices Soar as Asian Countries Brace-up to Tackle El Nino

The Rice Exporters Association of India (TREA) President, BV Krishna Rao, explained in an English Daily that Indonesia, the Philippines, and Malaysia are increasing their purchases of rice, thus driving the prices up.

VR Vidya Sagar, the Director of Bulk Logix, added that there is heightened demand from islands near the Philippines, as well as an opening in the Malaysian market, and even inquiries from Vietnam. M Madan Prakash, the President of the Agri Commodities Exporters Association (ACEA), stated that the new crop is expected to arrive in Vietnam towards the end of this month, with buyers urging for expedited shipments.

In order to avoid a similar experience of price surge as happened in 2007-08 several countries including Indonesia, the Philippines, and Malaysia are stockpiling to not get affected by the upcoming El Nino, trade analyst S Chandrasekaran noted.

In 2007-08, India prohibited rice exports, causing the grain to reach $1,000 on global markets. According to the Food and Agriculture Organisation (FAO), a UN agency, it caused a crisis that harmed the poor. Delhi-based exporter Rajesh Paharia Jain said that if the government supports them, then they would be able to export the same volume of rice as done in the last fiscal.

The International Grains Council quotes India's 25% broken white rice for $442 a tonne, while Thailand and Vietnam quote $490 and $480, respectively. Rice prices in India have risen by 27% every year, outpacing Thailand (11%) and Vietnam (16%). According to the FAO, the development of El Nino could have an impact on maize, rice, and soybean production.

El Nino is expected to form in the second half of the monsoon season beginning in August, according to the India Meteorological Department (IMD), whereas the Australian Bureau of Meteorology anticipates it to develop in late July. The event, which causes drought in Asia and floods in America, Jain added, refers to a 3% increase in rice exports in fiscal 2022-23.

White rice prices are rising as the Food Corporation of India (FCI) purchases stockpiles for the central pool, which will be distributed through ration stores and used to meet any food emergencies. Last week, FCI's rice procurement surpassed 50 million tonnes (mt), putting it on track to fulfill the 62.17 mt objectives for the current marketing year through September. Due to poor demand, Indian parboiled rice prices have fallen below $380 per tonne on the worldwide market. It is more than $100/tonne cheaper than Thailand and Pakistan.

Rice stocks with FCI were at a five-year low as of April 1, and overall foodgrain stocks, including wheat, were also at a five-year low, owing to wheat procurement issues last year.  Last year, lower wheat output hampered procurement, while additional rice was diverted to compensate for distribution through ration stores.

India's rice exports have been boosted by record production of 130.83 million tonnes (129.47 million tonnes) of rice during the current crop year through June. Despite a reduction in kharif rice production to 108 mt from 111 mt the previous year, the output was offset by increased acreage in the rabi season.