September 13, 2011 / 2:22 AM / in 6 years

RPT-UPDATE 2-India rice exports kick off at $470/T-sources

(Repeats story issued late on Monday)

* Competitive rice prices to help spur rice deals

* Wheat exports may be slow on uncompetitive prices

By Mayank Bhardwaj

NEW DELHI, Sept 12 (Reuters) - A leading Indian trading firm has sold 100,000 tonnes of non-basmati rice to Nigerian buyers at $470 per tonne, undercutting Thai and Vietnamese competitors in the first deals since the food minister gave a nod to 2 million tonnes of exports.

The company also sealed deals to export 50,000 tonnes of wheat to Bangladesh at $280 per tonne free on board (fob), said one of the trade sources who was directly involved with the deal but could not be identified due to company policy.

Both rice and wheat export deals were confirmed by three other traders.

“For exports of 100,000 tonnes of non-basmati rice to Nigeria, our average price is $470 per tonne fob, as it includes various categories,” the first source said.

Last Thursday, Food Minister K.V. Thomas said India, the world’s second-biggest producer of rice and wheat, would allow private traders to export 2 million tonnes each of common grades of rice and wheat without conditions.

In July, New Delhi said it would allow one million tonnes of rice exports and set a floor price of $400 per tonne for the sales, but a court ordered their suspension while it considers complaints over the way these quotas were allocated.

The complaints are now likely to be dropped, said Vijay Setia, head of the All India Rice Exporters Association, which brought them.

It is not yet clear whether these exports would be included in the government’s latest 2 million tonnes cap.

Traders said supplies from top exporters Thailand and Vietnam could cost about $540-$600 per tonne fob depending on quality and type of rice.

On Wednesday in weekly pricing, benchmark Thai prices for 100 percent B grade white rice RI-THWHB-P1 touched $640 per tonne, the highest rate in nearly three years, helped by rising demand from Nigeria, usually the world’s second-largest importer.

“We were expecting a flurry of deals, as Indian prices are extremely competitive. It will not take long before traders snap deals for the entire 2 million tonnes permitted by the government,” said Mohan Narang, director at trading firm K.S. Commodities.

Thailand, the world’s biggest rice exporter, aims to export a record of more than 10 million tonnes of rice this year, up from 9 million tonnes in the previous year.

The No. 2 supplier, Vietnam, plans to export seven million tonnes of the grain this year, breaking its shipment record set in 2010, a state-run newspaper said.

“There is a good deal of demand from Africa, southeast Asia and, to an extent, from the Middle East. And the best part is our prices are very, very attractive against the main suppliers,” said Setia.

India’s government buys rice at about $235 per tonne from farmers, making export levels attractive for the industry.

Wheat exports, however, may be slow as Indian prices are currently uncompetitive with rivals such as Russia.

Last week, Egypt, the world’s largest wheat importer, bought 300,000 tonnes from Russia and Kazakhstan at $289.70 per tonne to $291.50 per tonne fob.

Indian companies offered wheat at around $300 per tonne in July when the government first said it would permit exports but supplies from the Black Sea were at around $244 per tonne then.

India banned exports of common grades of rice in 2008, joining the protectionist measures of other leading producers amid a global shortage.

Since then consecutive bumper harvests have swelled government stocks of wheat and rice, allowing New Delhi to answer calls from traders to let them take advantage of high international prices.

Rice stocks at government warehouses stood at 25.27 million tonnes against a target of 9.8 million tonnes on Aug. 1. Wheat stocks were at 35.87 million tonnes, substantially higher than a target of 17.1 million tonnes set for the July-September quarter. (Editing by Jo Winterbottom)

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