Surge in Indian Parboiled Rice Prices Amidst Global Shift from White Rice
A noticeable surge in market prices has swept over Indian parboiled rice, witnessing an uptick of more than $50 per tonne in recent weeks. This surge is predominantly attributed to heightened export demand, spurred by the Indian government’s imposition of a ban on non-basmati white rice shipments. Exporters have been quoting prices ranging from $460 to $500 per tonne on a free-on-board basis. However, price volatility has given some exporters pause, leading to cautiousness in signing new deals.
The Kakinada port has been abuzz with activity, with an estimated shipment of around 1.7 Million tonnes of parboiled rice scheduled for this week. The port’s appeal has led to numerous vessel bookings for loading rice shipments.
Global Panic Buying and Thailand’s Response
The US Department of Agriculture (USDA) highlighted a surge of 5-10 percent in export prices for all grades of Thai rice. This escalation was attributed to a strengthening baht and widespread panic buying in the aftermath of India’s white rice shipment embargo. Thai rice export prices continue to climb, boasting a range between $15 and $45 per tonne higher than Vietnamese rice. This stands in contrast to the typical price difference of $15-25 per tonne.
Shift from White Rice and Market Dynamics
As white rice prices have soared above $550 per tonne, buyers have sought alternatives, particularly Indian parboiled rice, which is being quoted at $475 per tonne. Rajesh Paharia Jain, an exporter based in Delhi, noted the demand surge for parboiled rice from white rice buyers aiming to make the switch due to cost considerations.
Although parboiled rice prices had initially climbed, recent supply increases have led to a cooling trend, with prices resting at $460 per tonne. BV Krishna Rao, the President of The Rice Exporters Association (TREA), projected a further downtrend in the coming week.
Price Volatility and Uncertainty
The market has experienced considerable fluctuations, with FOB prices reaching $500 per tonne for parboiled rice. This volatility has hindered transactional activity, with daily price changes causing reluctance among exporters to sign contracts with overseas buyers. As VR Vidya Sagar, Director of Bulk Logix, pointed out, the uncertainty has dissuaded many from committing to deals that might be adversely affected by rapid price shifts.
Anticipated Shifts and Market Impact
The shift from white rice to parboiled rice is anticipated to unfold, albeit not entirely. BV Krishna Rao suggested that while demand for parboiled rice is likely to increase, not all buyers will make a complete transition. He estimated a potential 2-3 million tonnes shift from white rice to parboiled rice, while Thailand and Pakistan could gain a similar market share in the white rice segment. However, there’s also a prospect of 2-3 million tonnes in demand restriction.
Conclusion
India’s ban on white rice exports, enacted on July 20, triggered a global stir and propelled the surge in parboiled rice prices. As supply chains adjust and buyers seek alternatives, the rice market faces an era of shifts and adaptations, with parboiled rice emerging as a favored option amidst the evolving dynamics. One should hold for some time before making a buying decision.