Rice exports from India, already facing the headwinds of the US-Iran standoff and coronavirus outbreak in China, have been singed further with the scourge spreading to more countries including Iran, which is the top international destination for Indian basmati.
In the backdrop of the bleak export outlook, coupled with robust paddy production during 2019-20 of more than 117 million tonnes (MT) – higher by 9.67 MT than the five-year average production of nearly 107.80 MT – Indian exporters are now staring at losses.
Rice exports, which posted a compounded annual growth rate (CAGR) of nearly 14 per cent between 2010 and 2019, have been hit by the negative geopolitics, tighter trade norms and higher minimum support price (MSP) by the government.
The negative market dynamics are resulting in a downward basmati price trend on the bourses. On commodity exchange ICEX, top selling pusa basmati variety (PB1121) was trading at Rs 3,073 per quintal, or 1.4 per cent lower than the previous close, on being hammered by the coronavirus phenomenon.
However, consistent fall was seen in spot market for paddy .
In Delhi prices have almost halved from their peaks. The decline in exports and record domestic crop along with complaints of procurement not happening smoothly in many places. All put together has hit prices in local manusia.
Following coronavirus outbreak, Iran has stopped Indian basmati shipments with the result that exports have already fallen 18-20 per cent this fiscal year 2019-20.
Iran and Middle East together are the largest importers of Indian basmati, accounting for more than 30 per cent of shipments, Kedia Advisory director Ajay Kedia said, adding now the market is technically under long.
One of leading rice exporters Kohinoor Foods joint managing director Gurnam Arora said the halt on shipments to Iran was the major element weighing down the domestic rice market.
“Coronovirus is the biggest worry for exporters and with Iran now reporting such cases, the situation has only worsened. The impact of the outbreak has already started to show on the international trade and travel,” he told Business Standard adding the rice exporters had adopted a wait and watch stance as to how the situation unfolds in the coming 4-6 weeks.
Meanwhile, Mumbai-based rice trader Devendra Vora exuded greater pessimism with the market and said the rice segment was currently in a tailspin with no rescue in sight. “The market has continued to fall due to the various external and internal factors and we can only hope that the situation improves in the next 1-2 months,” he observed.
He had earlier suggested that the Centre should promote farm exports to Brazil, which was a big consumer of rice and wheat, so as to partly cushion the prospective losses to Indian exporters.
Export of rice especially basmati, to Iran, valued at $1.5 billion in 2018-19 financial year, continue to weather uncertainty following the US sanctions on its crude oil in 2019. Iran accounts for 25 per cent of Indian rice shipments.
According to a report by US-based trade finance company Drip Capital, rice exports have seen a decline across the globe with major dip emerging from West Asia due to geopolitical tensions. “YTD (year to date) exports so far are looking bleak with Iran, the biggest export market, seeing a 22 per cent fall in shipments,” Drip Capital co-founder and co-CEO Pushkar Mukewar said.
India is the world’s largest rice exporter accounting for 25 per cent of global share, while the commodity contributes 2 per cent to the overall Indian export basket.
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