India’s restrictions on rice exports have paralysed trading in Asia, with buyers scouring for alternative supplies from Vietnam, Thailand and Myanmar where seller are holding off on deals as prices rise, industry officials said. India, the world’s biggest exporter of the grain, banned shipments of broken rice and imposed a 20% duty on exports of various other types as the country tries to boost supplies and calm prices after below-average monsoon rainfall curtailed planting.
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Rice is the latest in a string of commodities that have faced export curbs this year as governments struggled to raise supplies and fight inflation amid trade disruptions triggered by the Ukraine war. Rice prices have jumped 5% in Asia since India’s announcement and are expected to rise further this week keeping buyers and sellers on the sidelines. “Rice trading is paralysed across Asia. Traders don’t want to commit anything in a hurry,” said Himanshu Agarwal, executive director at Satyam Balajee, India’s biggest rice exporter. “India accounts for more than 40% of global shipments. So, nobody is sure how much prices will rise in the coming months.” Rice is a staple for more than 3 billion people, and when India banned exports in 2007, global prices shot to record highs of around $1,000 per tonne. India’s rice exports reached a record 21.5 million tonnes in 2021, more than the combined shipments of the world’s next four biggest exporters of the grain: Thailand, Vietnam, Pakistan and the United States.
Rice loading has stopped at Indian ports and nearly one million tonnes of grain are trapped there as buyers refuse to pay the government’s new 20% export levy on top of the agreed contract price. Though there are some buyers ready to pay higher prices for new contracts, shippers are currently sorting out pending contracts, Nitin Gupta, vice president for Olam India’s rice business. As Indian exporters stopped signing new contracts, buyers are trying to secure supplies from rival Thailand, Vietnam and Myanmar, which have raised the price of 5% broken white rice by around $20 per tonne in the past few days, dealers said. But even these suppliers are reluctant to rush for contracts as they are expecting prices to strengthen.
“We expect prices to rise further over the coming weeks,” a trader based in Ho Chi Minh City said. Vietnam’s 5% broken rice was offered at $410 per tonne on Monday, up from $390-$393 per tonne last week, traders said.
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