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Slump in rice demand, weaker rupee drag India rates lower

BENGALURU (Reuters) - Export prices for rice in major producers across Asia fell this week, with rates in India hitting their lowest level in 14 months on sluggish demand and a weaker rupee.

FILE PHOTO: Women plant rice saplings at a paddy field in a village in Nagaon district, in the northeastern state of Assam, India, July 3, 2018. Picture taken July 3, 2018. REUTERS/Anuwar Hazarika/File Photo

Rates for India’s 5 percent broken parboiled variety fell by $4 to $388-$392 per tonne.

“Due to falling rupee, export prices are also coming down,” said B V Krishna Rao, President of the Rice Exporters Association.

Indian rupee has lost 8 percent so far this year, prompting exporters to offer at lower rates.

African countries are making purchases but Bangladesh is not buying after the duty hike, Rao said.

Imports by Bangladesh have dropped after the country imposed a 28 percent tax on rice imports to support its farmers after local production revived.

India on Wednesday raised prices paid to local farmers for common grade paddy rice by 13 percent from a year ago to 1,750 rupees ($25.50) per 100 kg, a move that could hit exports in the next season, dealers said.

In Vietnam, prices of 5 percent broken rice fell to $425-$430 a tonne from $450-$455 a week earlier.

“Prices have dropped following declines in other rice producing countries and on increasing supplies as the summer-autumn harvest has started in some parts of the Mekong Delta,” a Ho Chi Minh City-based trader said.

“I think prices will fall further over the coming weeks as the harvest peaks,” the trader said.

Vietnam exported 3.56 million tonnes of rice in the first half of this year, up 25 percent from a year earlier, according to the government’s General Statistics Office.

Vietnam’s Ministry of Agriculture and Rural Development late last week forecast this year’s unhusked paddy output at 43.9 million tonnes, up 3 percent from last year.

In Thailand, prices of the benchmark 5 percent broken rice eased to $385-$388 per tonne range from $385-$395 last week, free on board (FOB) Bangkok.

Prices were little changed as markets remained quiet, one trader said.

Another trader said a slight pickup in trade after improvement in shipments could see higher prices.

Reporting by Aukkarapon Niyomyat in Bangkok, Khanh Vu in Hanoi, Rajendra Jadhav in Mumbai and Ruma Paul in Dhaka; Editing by Gopakumar Warrier