Rice prices in India hold steady; low rainfall may hurt output

BENGALURU (Reuters) - Rice prices in India held steady this week as concerns over lower production due to below-normal rainfall offset sluggish demand in the world’s top rice exporter.

A labourer carries a sack filled with rice to load onto a truck from the railway's goods yard in Ahmedabad, February 1, 2018. REUTERS/Amit Dave/Files

Prices for India’s 5 percent broken parboiled variety were hovering between $392-$396 per tonne this week, unchanged from last week.

India’s rice exports in April to June rose 4.4 percent from a year ago to 3.15 million tonnes due to good demand from African countries.

“Rice planting has been lagging due to poor rainfall. Yields could (be) impacted if rainfall fails to improve next week,” said an exporter based at Kakinada in the southern state of Andhra Pradesh.

Farmers in India had planted summer-sown paddy rice on 26.27 million hectares as of Aug 3, down 4.2 percent from a year ago.

The country is likely to receive below-normal monsoon rains in 2018, a private weather forecaster said on Wednesday.

In contrast, heavy rains and floods in rice-growing regions in Vietnam and Thailand are affecting harvests and are to likely impact rice prices.

In Thailand, 30 provinces have been affected by seasonal floods in the past three weeks, while nine provinces, including some rice-growing areas, are partially inundated.

“The flood in northeastern regions may raise the domestic price of Jasmine rice, which has been quite strong this year, and could impact export prices in the future,” a trader said.

Overall demand for Thai rice remained relatively quiet this week, but prices inched up as some exporters were fulfilling old deals.

“Many exporters are buying rice this week because a ship from Africa is arriving... These are old deals with markets like Nigeria, Senegal, and Ghana. Prices usually go up when the ship arrives,” another Bangkok-based trader said.

Thailand’s benchmark 5 percent broken rice rose slightly to $390-$395 per tonne this week free on board (FOB) Bangkok, from $385-$393 last week.

Meanwhile in Vietnam, rates for 5 percent broken rice were $395-$400 a tonne, up from $385-$395 a tonne a week ago.

“Prolonged rain is slowing down (the) summer-autumn harvest, while demand is picking up,” a Ho Chi Minh City-based trader said.

“We are seeing rising demand from new markets, including Cuba, Syria and Iraq... There are also rumours that the Southern Food Corp (or Vinafood II) is buying rice from farmers for stockpiling,” the trader added.

In Bangladesh, rice imports in July-August stood at 26,730 tonnes, data showed, after the government imposed a 28 percent tax on shipments to support its farmers after local production revived.

“We are not striking any new deals for rice as it is no longer profitable given the huge import duty,” a trader said.

Reporting by Panu Wongcha-um in Bangkok, Khanh Vu in Hanoi, Rajendra Jadhav in Mumbai, Ruma Paul in Dhaka; Editing by Koustav Samanta and Jan Harvey