April 11, 2019 / 1:21 PM / a month ago

India rice prices dip; drought fears spur domestic buying in Thailand

BENGALURU (Reuters) - Rice export prices in top exporter India edged lower this week due to sluggish demand, while fears of a drought this year supported up domestic buying in Thailand.

A woman spreads paddy crop for drying at a rice mill on the occasion of International Women's Day, on the outskirts of Agartala, India March 8, 2018. REUTERS/Jayanta Dey/File Photo

India’s 5 percent broken parboiled variety was quoted around $387-$390 per tonne this week, down from last week’s $390-$393.

“Demand is very poor at current price level. The appreciation in the rupee has limited scope to cut prices,” said an exporter based at Kakinada in the southern state of Andhra Pradesh.

A strong rupee dents exporters’ returns from overseas sales.

India’s rice exports for April-February fell 9.4 percent from a year earlier to 10.57 million tonnes, as major buyer Bangladesh trimmed its purchases due to a bumper local harvest, a government body said.

Farmers in Bangladesh have planted the summer rice variety on 4.9 million hectares of land, exceeding the target of 4.8 million hectors, Mir Nurul Alam, head of the country’s Department of Agriculture Extension, told Reuters on Thursday.

The summer-sown crop, also known as Boro, usually contributes more than half of Bangladesh’s typical annual rice production of around 35 million tonnes.

Traditionally the world’s fourth-biggest rice producer, Bangladesh was forced to increase imports to shore up reserves in 2017 after floods wrought havoc on local crops and pushed domestic rice prices to record highs.

In Thailand, the world’s second largest rice exporter, benchmark 5-percent broken rice prices rose slightly to $405-$410 a tonne, free on board Bangkok, from $395-$396 last week.

The small price increase was due to higher domestic demand driven by fears of a drought this year, traders said.

Overseas demand for Thai rice has remained flat since the beginning of the year due to the Thai currency’s strength versus the U.S. dollar.

“It is mostly speculative buying in the domestic rice market at the moment as mills and buyers are concerned about the supply situation amid the prospect that drought could harm harvest,” a Bangkok-based trader said.

In Vietnam, rates for 5 percent broken rice were flat for the fourth straight week at $360 a tonne.

“With rising demand, some traders are having trouble purchasing enough rice from farmers to fulfil their export orders,” a trader based in Ho Chi Minh City said.

“They signed the contracts earlier this year when both domestic and export prices were lower.”

Prices are likely to edge up over the coming weeks now that the major winter-spring harvest is over, the trader added.

Vietnam’s rice exports in March rose 150 percent from February to 693,742 tonnes, and higher than a government estimate of 600,000 tonnes, customs data showed.

Reporting by Panu Wongcha-um in Bangkok, Khanh Vu in Hanoi, Rajendra Jadhav in Mumbai, Ruma Paul in Dhaka; editing by Arpan Varghese and Jane Merriman

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