Price Negotiations for Rice Export Continue Amid India’s Ban on Rice Exportation

Due to El Niño and non-stop rain, rice fields dried up or submerged in water forcing affected countries to consider rice export.

Climate change heavily affects farmers – either drying their fields or submerging them in water. Rice, in particular, is the most affected crop, which is also the staple food of Asian countries. When there’s a rice shortage, countries might consider rice export, especially the Philippines.

Thailand and Vietnam May Increase Rice Export Prices

Exporters are hastening to accommodate rice supplies from farmers who have increased after an upswing in the world market. It could compromise millions of dollars worth of deals.

Thailand and Vietnam rice exporters are still in talks regarding prices on sales contracts for about 500,000 metric tonnes for August shipments, according to two trade sources. Rice farmers and exporters who purchased advance shipments will profit from contracting world supplies. Buyers, on the other hand, will possibly lose regardless of booking cargo prior to India’s ban on rice exports.

Rice importers are left with no choice but to buy rice at higher prices. Sellers will backslide on contracts, predisposed to the considerable increase in the grain’s prices.

Last month, India announced its ban on white rice exportation at a time of domestic production uncertainty. This increases the food supply issues among importers of rice in Asia and Africa. India is the world’s leading rice exporter, supplying about 40% of global supplies, followed by Thailand, and Vietnam respectively. The two Asian countries are expected to ship over one million metric tonnes of rice this month.

“The current prices are way higher than the contracted prices. The export price surge has resulted in a sharp rise in domestic paddy prices. Several traders are now rushing to speed up their purchases from farmers,” said a Ho Chi Minh City trader.

Last month, India disclosed it will discontinue rice exports. This made global prices of main rice varieties transported worldwide soar to around $80 per metric tonne. Thailand’s 5% broken rice prices climbed to $625 per metric tonne compared to $545 around two weeks ago. A similar variety from Vietnam rose to $590 per metric tonne against $515-$525.

No Shortfall in Rice Supply is “Misleading”

The Philippines has an adequate rice supply to last for months despite the damage the country suffered from past storms, according to the Department of Agriculture.

“It is enough for the next few months, we’re also in the middle of planting season, and we’re expecting harvest by August and September,” said Agriculture Undersecretary Leocadio Sebastian.

Sebastian added that the country has a sufficient rice supply because of the 5.7 million metric tonnes of play harvested before the rainy season. Besides, there’s an additional 1.9 million metric tonnes of imported rice in stock.

However, Federation of Free Farmers (FFF) national manager Raul Montemayor, claimed that Sebastian’s statement the country has enough rice supply is “misleading.” He stated the existing stocks will only last until September and the next local harvest will be in October.

Montemayor added that if the stocks are totally consumed, then the country must import to supplement the current rice stock. However, it would be quite risky because imports are decreasing due to higher international prices.

Moreover, Agriculture Undersecretary Mercedita Sombilla noted the country’s rice stock will last for 39 days, less than the required stock to last for 60 days.

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