Indian rice prices have plummeted to their lowest levels in over two years, a consequence of overabundant supplies and lackluster demand from international buyers. This situation is putting pressure on exporters, who are now offering 5% broken parboiled rice at $377-$382 per ton, a notable decrease from $380-$385 the previous week, marking the lowest price since early December 2022. Similarly, 5% broken white rice is priced at $373 to $378 per ton this week.
Several factors contribute to this price slump. India is anticipating another bumper crop, provided monsoon rains remain favorable, which will further inflate already substantial stockpiles. As of June 1, India's state reserves of rice, including unmilled paddy, reached a record 59.5 million metric tons, significantly exceeding the government's target of 13.5 million tons for July 1. The anticipation of new supplies entering the market by the end of July and early August is also causing many buyers to delay purchases, expecting prices to decline further.
A New Delhi-based trader noted that overseas buyers are leveraging the competitive landscape, with multiple sellers from Thailand, Vietnam, and India vying to offload excess stocks, leading to aggressive price negotiations. This buyer's market intensifies the pressure on Indian exporters. The Indian rupee's depreciation has also played a role in pushing prices down.
In contrast to India, Vietnam's rice exports to Africa and the Philippines have remained stable. Vietnamese traders are offering 5% broken rice at $380-$390 per metric ton. Preliminary shipping data indicates that 256,583 tons of rice are slated to be loaded at Ho Chi Minh City port in July, primarily destined for the Philippines and Malaysia. The summer-autumn harvest in the Mekong Delta, a key rice-growing region in Vietnam, is currently peaking.
Thailand's 5% broken rice is quoted at $380-$385 per tonne, slightly wider than the previous week's $380, due to increased production costs in the domestic market, while international demand remains subdued. A Bangkok-based trader anticipates new rice supplies entering the market soon, potentially driving prices down.
Other factors are impacting the Asian rice market. The Philippines is seeking to diversify its rice import sources, potentially affecting Vietnam, its largest supplier. In Bangladesh, despite adequate rice stocks, domestic prices remain high, straining low-income households. Traders attribute this to supply chain inefficiencies, high production costs, and market manipulation.
Despite the current low prices and ample production across Asian markets, industry observers believe a significant price rebound is unlikely in the short term. High stockpiles in India further diminish the prospect of price recovery. This environment presents both challenges and opportunities for exporters, contingent on their ability to optimize cost-efficiency and explore market diversification.
Adding to the complexity, the Aush rice crop in Bangladesh has experienced a year-on-year production decline for the fourth consecutive season, with this year's output estimated at 2.7 million tonnes, down from 2.9 million tonnes last year. Concerns are rising about the long-term implications for national food security if this trend persists. To bolster food security, Bangladesh will import 400,000 metric tons of rice ahead of the upcoming flood season.
