According to media reports on Tuesday, affected by the export ban imposed by India, the world’s most important rice exporter, at the end of last month, rice merchants from major exporting countries such as Thailand and Vietnam are urgently negotiating to adjust sales contracts for nearly 500000 tons of rice, which were originally scheduled to be shipped in August.
As a background to this matter, the Indian government announced on July 20th that it would ban the export of white rice except for Indian fragrant rice to ensure sufficient supply in the domestic market, and this change will take effect immediately. In the past 15 years, India has been the world’s largest exporter of rice, exporting a record 22.3 million tons of rice in 2022, nearly half of which is cheaper non Indian fragrant rice, which is mainly supplied to low – and middle-income countries.
By the way, India’s rice ban is also related to climate change. At the beginning of July this year, India suffered a historic heavy rainstorm, which flooded many rice fields. So the Indian government responded to the continuous upward trend in rice prices by issuing a ban.
According to statistical data, India’s rice exports account for nearly 40% of the global market, followed by Thailand and Vietnam, which together account for approximately 60% of India’s exports.
Therefore, under the influence of the Indian ban, global rice prices have quickly moved. In the past two weeks, the price of 5% crushed rice (RI-THBKN5-P1), which is the benchmark in Thailand, has surged from $550/ton to $625, while the price of Vietnamese benchmark rice (RI-VNBKN5-P1) has also increased from around $515/ton to $590.
Against the backdrop of the rapid rise in rice prices, farmers are also demanding higher purchase prices from exporters, which is why these exporters are busy urgently negotiating price increases. A trader based in Singapore stated that since India issued an export ban, the price of one ton of rice has increased by almost $80, making it difficult for exporters to fulfill the low price contracts signed earlier.
According to a rice trader in Ho Chi Minh City, the current market price is much higher than the contract price, and the surge in export prices has driven up the purchase price of rice. Many traders are running around in the fields, striving to accelerate the acquisition process.
On the other side of the rice trade, many importing countries are also beginning to feel uneasy about the international supply situation. Taking the Philippines as an example, an official from the Ministry of Agriculture stated on Tuesday that the Philippines will increase its rice reserves, including increasing imports. The government encourages private importers to increase the quantity of imports. At the same time, the Philippine government is also likely to ensure the supply of critical rations through agreements between countries.
Post time: Aug-09-2023