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10 Sep 2009

Agriculture

India Bans White Rice Exports: Windfall for Rice Market in 4Q09 into early 2010 (Business Brief No.2628)

The Indian government has announced that it will continue to ban exports of non-basmati (white rice) implemented last year in light of the country's rice output pointing toward a historical low in the 2009/10 crop year. The move is expected to have significant impact on the global rice market. Earlier, India had been expected to resume exporting white rice (due to huge stockpiles) at the year-end, which would have led to intense competition in the world's rice market amid the falling rice prices.
Both Thailand and Vietnam – among the world's largest rice exporters – are expected to receive a windfall from India refraining from shipping rice. However, the right timing would have been during the remainder of this year and into next year amid the rising rice prices. Vietnam will likely benefit considerably given that the prices of Vietnamese white rice are now much lower than their Thai counterparts. We should take this opportunity to release our huge stockpiles into export markets at the expense of Indian rice, especially after the paddy pledging program was replaced by the price guarantee program to ensure sufficient domestic supplies.

Nonetheless, Thai rice exports may be hurt by shipments from Myanmar and Cambodia that have shown leapfrogging growth since 2007, even though their overall exports are still quite moderate.

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