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Strong rupee pushes India rice prices to seven-month high, dampening exports

(Reuters) - Rice export prices in India rose to their highest level in more than seven months as the rupee appreciated, denting demand, while trading companies in Vietnam increased domestic buying to fulfil new overseas deals.

Workers spread rice for drying at a rice mill on the outskirts of Kolkata, India, January 31, 2019.Picture taken January 31, 2019. REUTERS/Rupak De Chowdhuri/File Photo

India’s 5 percent broken parboiled variety was quoted around $392-$395 per tonne this week, up from $386-$389 last week.

“Demand has been moderating due to the price rise. African buyers are not ready to pay higher prices,” said an exporter based at Kakinada in the southern state of Andhra Pradesh.

The Indian rupee was trading near its highest level in seven months, trimming returns from overseas sales for traders in the world’s largest rice exporter.

In Vietnam, rates for 5 percent broken rice were in line with last week’s $360 a tonne.

“Demand for Vietnamese rice is seen rising, with key trading companies increasing their purchases from farmers for deals they have signed with customers from Malaysia, Philippines and Iraq,” a trader based in Ho Chi Minh City said.

Vietnam, the world’s third largest rice exporter, has shipped more than 200,000 tonnes of rice to Malaysia so far this year, while clients from Iraq have placed orders for 120,000 tonnes, the trader said.

A source with the Ministry of Industry and Trade said Egypt was seeking to buy 20,000 tonnes of 10-12 percent broken rice from Vietnam for delivery in June.

Thai benchmark 5 percent broken rice prices were quoted at $390-$393, free on board Bangkok, on Thursday, up from $380-$385 last week.

With demand little changed, traders attributed the price rise to fluctuations in the exchange rate between the baht and the U.S. dollar.

On Tuesday, the Thai cabinet agreed to extend a rice trading agreement with the Philippines which expired in December for another two years. The agreement allows Thailand, the world’s second-largest rice exporter, to take part in tenders issued by the Philippines, stating that the two countries can trade up to 1 million tonnes of rice per year.

Meanwhile, Bangladesh will give its farmers free fertiliser and seeds to boost cultivation of a type of rice that requires less irrigation, the country’s agriculture minister said on Thursday.

The stimulus package, worth nearly 402 million taka ($4.75 million), could help more than 459,000 farmers increase production of the Aus rice variety grown during the May-August season, Abdur Razzak, the minister, said.

“We are encouraging farmers to grow more Aus rice as it matures during the monsoon. So it needs only a little irrigation to cultivate,” Razzak told reporters.

Bangladesh, usually the world’s fourth biggest producer of rice, was forced to massively increase imports to shore up domestic reserves in 2017 after floods wrought havoc on local crops.

Reporting by Rajendra Jadhav in Mumbai, Patpicha Tanakasempipat in Bangkok, Khanh Vu in Vietnam, Ruma Paul in Dhaka; Editing by Kirsten Donovan