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India rice rates ease on falling rupee, demand; Thai harvest to augment supply

BENGALURU (Reuters) - Rice export prices in India eased from a four-month high this week due to a depreciation of the rupee and sluggish demand, while Thai traders expect prices to drop over the coming weeks as supplies start to arrive from the new season crop amid flat demand.

A farmer spreads fertilizer in his rice field on the outskirts of Ahmedabad, India, August 30, 2016. REUTERS/Amit Dave/Files

India’s 5 percent broken parboiled variety was quoted around $376-$383 per tonne this week, compared with $378-$384 last week.

“Prices are moderating due to a weak rupee but still demand from African countries is weak,” said an exporter based at Kakinada in the southern state of Andhra Pradesh.

The rupee fell to a two-week low on Thursday, increasing exporters’ margin from overseas sales.

Export prices in India shot up in the second half of last month after the central state of Chhattisgarh, a leading rice producer, raised the minimum paddy buying price.

In neighbouring Bangladesh, rice imports slowed to 106,000 tonnes in July-December due to the imposition of a tax in June, data from the food ministry showed. The country imported a record 3.9 million tonnes of rice in the last financial year that ended in June 2018.

The south Asian country, which emerged as a major importer of the grain in 2017 after floods damaged crops, imposed a 28 percent duty to support its farmers after local production revived.

In Thailand, benchmark 5-percent broken rice was quoted at $380-$400 per tonne, free on board Bangkok, slightly widening from $380-$390 last week as the baht strengthened against the dollar.

Traders said demand for Thai rice had been flat this new year and that supplies from the new harvest would likely bring down prices over the next few weeks.

December to January is usually the rice harvest season in Thailand, but this time there has been some delay in harvesting in some parts of the country.

“We are now expecting supply from the new harvest to enter the market in early February, so that could affect rice prices this month,” a Bangkok-based trader said.

In Vietnam, rates for 5 percent broken rice fell to $370-$375 a tonne from $385 a week earlier due to weak demand.

“This year is forecast to be a difficult year for Vietnamese rice exporters due to weaker demand, along with China’s move to impose technical barriers on shipments from Vietnam,” a trader based in Ho Chi Minh City said.

China has put a cap on the number of Vietnamese companies eligible to export rice to China at 21, and Vietnam is asking China to add more firms to the list, reported the Nong Nghiep Vietnam newspaper.

Government data released last week showed Vietnam’s rice exports in 2018 rose 4.6 percent to 6.09 million tonnes. Rice export revenue in the year rose 16 percent to $3.05 billion.

“I think it’s time for Vietnamese farmers to reduce their rice growing area and turn parts of their rice fields into fishing farms,” said another trader.

Reporting by Panu Wongcha-um in Bangkok, Khanh Vu in Hanoi, Ruma Paul in Dhaka and Rajendra Jadhav in Mumbai; Editing by Subhranshu Sahu