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Informist, Friday, Mar. 28, 2025

 

By J. Navya Sruthi

 

MUMBAI - Rice prices have been on a downtrend in both domestic and international markets as supply of the grain has increased globally after India removed curbs on exports. However, market participants expect a rebound in prices in the long term supported by rise in demand. After the Indian government's announcement on Mar. 7 about lifting the ban on broken rice exports, prices of rice from Vietnam, Thailand, and Pakistan fell massively.

 

The data from Vietnam Food Association showed that export price of 25% broken rice variety from Vietnam was $369 per tonne as of Monday, down from $380 per tonne in January. Similarly, price of the same variety of rice from Thailand was at $381 per tonne on Monday, down from $413 per tonnes in January.

 

The data also showed that prices of 25% broken rice variety from India were at $379 per tonne on Monday, down from $403 per tonne in January. Prices of rice from Pakistan have fallen to $361 per tonne as of Monday from $387 per tonnes in January.

 

A significant factor for the price drop is the sharp increase in global supply, Ajay Kedia, director, Kedia Advisory, said in a note. "Rising competition among major exporters like Thailand, Vietnam, and Pakistan has also intensified price pressure."

 

"Demand for rice is very sluggish... sentiments are negative. There is no demand in India as well as overseas," Ashok Jindal, a basmati rice trader from Delhi said. "Prices are at bottom (lowest) because of major increase in production, which led to supply pressure and prices are on downtrend." High supply and low demand has led to the current situation.

 

The US Department of Agriculture has estimated global rice production at 712.22 million tonnes in 2024-25, according to its World Agricultural Supply and Demand Estimates report for March. The department had estimated rice production in 2023-24 at 703.02 million tonnes. India, the second largest rice producer, is expected to see a supply of 187 million tonnes of rice, which accounts to about 25% of the global rice supply.

 

According to Indian government's second advance estimate, the country's rice output during the kharif season is pegged at 120.7 million tonnes compared to 111.5 million tonnes the previous year, and the rabi crop is seen at 15.8 million tonnes compared to 12.4 million tonnes.

 

Record production in India and easing export restrictions have added to global availability, weighing on prices, Kedia said. However, buyers are cautious due to previous policy volatility in India, he said.

 

The government had banned exports of non-basmati broken rice in September 2022 to control prices in the domestic market. Later, in 2023, the government banned exports of non-basmati white rice and restricted shipments of basmati and parboiled rice varieties.

 

However, in September 2024, it removed the minimum export price of $950 a tonne on basmati rice shipments. In October, the government removed export restrictions on shipments of non-basmati white rice and parboiled rice amid high stocks in the domestic market. Finally, it also allowed exports of non-basmati broken rice earlier this month.

 

The decision of lifting the ban on exports comes at a time when rice stocks in the country are abundant. According to the data from Food Corp. of India, rice stocks at the Centre's pool as of Mar. 1 were at 36.8 million tonnes, much higher than 26.3 million tonnes a year ago. The current stock is also way above the buffer norm of 21.04 million tonnes as of Apr. 1.

 

Naveen Kumar, director, Viking Impex said white rice price also fell as Indonesia has stopped buying rice because it has already bought a lot. "Indonesia is the main buyer of white rice. They buy 3-4 million tonnes (per year). So, the moment Indonesia stops buying, all your Asian (rice) prices start falling."

 

According to the USDA's WASDE report for March, Indonesia's imports for 2024-25 were pegged at 0.80 million tonnes, sharply down from its estimate of 4.65 million tonnes last year and 3.50 million tonnes the previous year.

 

REBOUND SEEN SOON

Despite an imbalance in the supply-demand dynamics, market participants and experts see a rebound in rice prices both globally and in domestic markets in the long-term.

 

Buying of rice is expected to start in 45 days and a correction in prices can be seen then, Viking Impex's director Kumar said. "Right now, Indian white rice is priced between 29 to 30 rupees per kg. It will go up to 31.5 to 32 (rupees per kg)." On export front, the director said prices of 25% broken rice variety from India would rise to $450 per tonne from the current level, he added.

 

"I see the possibility of a price rebound in the second half of 2025 amidst support from geopolitical developments, rising trade conflicts due to the ongoing US–China tariff tensions, and an expected revival in global demand," Kedia said. Farmers in Thailand and Vietnam are also signalling acreage cuts due to falling prices, which could impact 2025–26 supply, he added.

 

The USDA estimated that India is likely to see all-time high exports during 2024-25 at 22 million tonnes. Exports from Vietnam have been pegged at 7.50 million tonnes, down from 9.04 million tonnes a year ago. Similarly, Thailand's rice exports for 2024-25 are seen at 7.50 million tonnes, down from 9.89 million tonnes a year ago.  End

 

US$1 = INR 85.43

 

Edited by Ashish Shirke

 

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