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Indian rice prices surge to over six-year high on steady demand, strong rupee

BENGALURU (Reuters) - Rice prices in India, the world’s biggest exporter of the staple, extended a recent rally this week to reach their highest in 6-1/2 years on robust overseas demand and limited supply amid a stronger local currency.

People transport sacks of rice through a boat at a flooded village in Morigaon district in Assam, India August 20, 2017. REUTERS/Anuwar Hazarika/File Photo

“Inquiries have risen from Asian and African buyers but supplies are limited. The recent upside in the rupee is also forcing us to raise prices,” said an exporter based in Kakinada in the southern state of Andhra Pradesh.

India’s 5 percent broken parboiled rice prices rose by $3 per tonne to $447-$451, the maximum since September 2011, when India lifted a four-year-old ban on non-basmati rice shipments.

The Indian rupee was trading near its highest in 32 months, slashing exporters’ returns from overseas sales.

India’s rice exports likely jumped 22 percent in 2017 to a record 12.3 million tonnes as Bangladesh ramped up purchases.

Bangladesh has emerged as a major importer of the grain since last year after floods damaged its crops.

On Thursday, the head of the state grains buyer in Bangladesh said the country will scrap a plan to import 150,000 tonnes of rice from Thailand, agreed at $465 a tonne in October.

In Thailand, benchmark 5 percent broken rice narrowed to $443-$446 per tonne, free-on-board (FOB) Bangkok, after hitting a peak since June 2017 last week at $440-$448.

The Thai Rice Exporters Association on Wednesday urged the government to temper a rise in the baht to protect exports, after the local currency soared to over four-year highs against the dollar.

Exporters were concerned that a stronger baht, which translates to higher export prices in U.S. dollars, could affect the competitiveness of Thai rice globally.

“Everything depends on the exchange rate. My business has gone quiet, because clients say it’s too expensive now,” said a Bangkok-based trader.

Meanwhile, high prices prevailed in Vietnam on depleted stocks, with benchmark 5 percent broken rice trading at $440-$450, FOB Saigon. Prices hit a more than three-year high of $450 a tonne last week.

Traders said, however, there would be enough supply for the deal with Indonesia, whose purchase of about 346,000 tonnes from four exporting countries including Vietnam had boosted prices.

Traders expect prices to ease around the end of February, when the harvest for the winter-spring paddy is complete.

“Prices might drop but it depends on demand at the time of harvest,” a trader based in Ho Chi Minh city said.

Another trader said the new crop has been collected from some 150,000 hectares (370,600 acres) of rice so far, a small part in the country’s 1.65 million hectares of growing area.

Reporting by Patpicha Tanakasempipat in Bangkok, Rajendra Jadhav in Mumbai, Mi Nguyen in Hanoi, and Ruma Paul in Dhaka, Editing by David Evans