India rice exports surging as ban ended on record crop

Rice exports from India, the world’s second-largest producer, may more than double this year on a record crop and as importers seek alternative to expensive supplies from Thailand, a shippers’ group said.

Shipments, including aromatic basmati rice, may total 6 million metric tonnes in the year ending March 31, compared with 2.2 million tonnes a year earlier, said Vijay Setia, president of the All India Rice Exporters’ Association. Traders have exported more than 1.8 million tonnes of non-basmati rice since India ended a three-year ban in September, he said.

Rising Indian exports may weigh on futures, which posted the first annual gain in three years in Chicago in 2011, and fill a shortfall in supplies from Thailand. Cheaper rice, staple for half the world’s population, may further cool global food costs, which dropped for a fifth month in November, according to the United Nations.

“Higher exports from India are pulling global prices lower,” Setia said. “India needs to ship value-added rice to get better prices.”

Global rice harvest is forecast to rise 3 per cent to 480.4 million tonnes in 2011, the United Nations’ Food and Agriculture Organisation said December. 8. Rice futures in Chicago gained 4 per cent last year after Thailand, the largest exporter, started a state rice-buying policy at guaranteed prices in October even as the worst floods since 1942 wreak damage on farms.

Thailand’s rice exports may drop to 9 million tonnes in 2012 from an estimated 10 million tonnes a year earlier as the government’s purchase boosts prices, Deputy Commerce Minister Poom Sarapon said December 23.

India won’t curb shipments as domestic stockpiles are comfortable, Food Minister KV Thomas said last week. State inventories climbed 16 per cent to 29.7 million tonnes as of Jan. 1 from a year earlier, the Food Corp of India said on Jan. 6.

“India will not think of a ban until it fears that local prices are going to increase,” Ajay Jain, assistant vice president at Almondz Commodities Ltd, said in by phone in New Delhi. “The rice crop is good in India and other countries and the global prices may remain stable.”

Rough-rice futures for March delivery advanced as much as 0.7 per cent to $14.785 per 100 pounds on the Chicago Board of Trade today and was at $14.705 at 9:26 am in Mumbai.

Indian traders have contracted to ship 2.24 million tonnes of basmati rice in the nine months through December 31. more than the 2.16 million tonnes a year ago, Setia said. The contracts may rise to 3.5 million tonnes for the full-year, while actual shipments may be 2.5 million tonnes, he said.

Shipments fetched an average $968 a tonne in 2011 as against $1,110 a tonne a year earlier, he said.

India may harvest a record 102 million tonnes in 2011-2012 season ending June after farmers boosted rice planting and the crop escaped damage from floods or pest attacks, he said.