India’s shock ban on wheat exports has prompted rice merchants to extend purchases and place uncommon orders for longer-dated deliveries, fearing the world’s high rice exporter could prohibit these shipments as properly, 4 exporters advised Reuters.
In the final two weeks, merchants have signed contracts to export 1 million tonnes of rice for shipments from June by September and are opening letters of credit score (LCs) shortly after signing offers to make sure the contracted amount shall be despatched even when India restricts exports, the folks mentioned.
Those ahead purchases come on high of roughly 9.6 million tonnes of rice already shipped out of India this yr – in step with document 2021 shipments – and will scale back the quantity of grain obtainable for different consumers throughout the coming months as loading schedules fill.
“International traders pre-booked for the next three to four months and everybody opened LCs to ensure business continuity,” mentioned Himanshu Agarwal, govt director at Satyam Balajee, India’s greatest rice exporter.
Normally merchants signal offers for the present and subsequent month.
Aggressive purchases from India may additionally scale back demand for rice from Vietnam and Thailand, the world’s second and third-biggest exporters respectively, that are struggling to compete on value.
India final month banned wheat exports in a shock transfer, days after saying it was concentrating on document shipments this yr. It additionally put a cap on sugar exports.
India just isn’t a high world wheat exporter, however it’s the world’s second-biggest sugar exporter behind Brazil.
Those export curbs led to hypothesis that India may additionally cap rice shipments, although authorities officers mentioned India doesn’t plan to as a result of it has ample rice shares and native costs are decrease than state-set help costs.
India’s wheat ban trapped a big amount of the grain at ports as a result of New Delhi solely allowed contracts backed by LCs to depart.
“Normally people open LCs while they nominate a vessel. This time they opened LCs for all rice contracts that were pending, so in case there is a ban on exports, at least the contracted quantity is shipped out,” Mr. Agarwal mentioned.
India accounts for greater than 40% of world rice commerce.
Overseas consumers are on the lookout for Indian rice as a result of it’s far cheaper than rivals, mentioned B.V. Krishna Rao, president of the All India Rice Exporters Association.
Indian 5% damaged white rice is obtainable between $330 and $340 per tonne on a free-on-board (FOB) foundation, considerably decrease than Thailand’s $455 to $460 a tonne and Vietnam’s $420 to $425, sellers mentioned.
Thailand and Vietnam aren’t capable of compete with India and they’re making an attempt to discover methods to help costs, Thailand’s authorities has mentioned.
If India restricts exports, world costs may bounce sharply, mentioned a New-Delhi-based supplier with a worldwide buying and selling home.
“Indian rice is more than 30% cheaper than other destinations. Poor buyers in Asia and Africa would be forced to pay very high prices if India restricts exports. That’s why there is a rush to buy Indian rice,” the supplier mentioned.
Bangladesh, China, Benin, Cameroon, Nepal, Senegal and Togo are key consumers of India’s non-basmati rice, whereas Iran and Saudi Arabia are key consumers of premium basmati rice.
India exported a document 21.5 million tonnes of rice in 2021, in contrast with mixed exports of 12.4 million tonnes by Vietnam and Thailand.
Panic shopping for by importing international locations was anticipated after the rumours of the ban started circulating as a result of no different nation can substitute Indian shipments, mentioned a Mumbai-based supplier with a worldwide buying and selling agency.