Financial Daily from THE HINDU group of publications
Saturday, Mar 27, 2004
Agri-Biz & Commodities
Industry & Economy - Exports & Imports
Rice exports may resume without Govt support
Chennai , March 26
RICE exports from the country may resume if the current bullish trend in the global market continues, though the trade is divided over whether the Government's help is required for it.
"We are pretty bullish on rice exports. We think we can start shipments in a month on merits, that is without any reimbursement of transport charges from the Government," an official with a multi-national trading firm told Business Line.
However, Mr D.P. Singh, Chairman, All-India Grain Exporters Association, said without the Government reimbursing the transport costs for grains, the prices for rice export would not be workable. "Maybe, wheat exports would be possible but no rice exports," he said.
The Government had, till August last year, allocated rice from the Food Corporation of India (FCI) stocks for exports and the offer prices were lower than the domestic market price. Since then, allocations have been suspended on non-availability of railway wagons and declining buffer stocks. As on February 1, foodgrain stocks totalled 24 million tonnes (mt) as against over 40 mt during the same period last year. Foodgrain stocks have declined on rising exports and lower crop last year.
In January, the Government announced that exporters would be allowed to procure foodgrains directly from the growers and they would be reimbursed the transport cost. The nuts and bolts of the policy are yet to be put in place.
"A panel of secretaries has been put together and they are deliberating on how go about with this policy. But we expect the policy to be announced only after elections," exporters said.
The official with the multi-national firm said some buyers from abroad had begun to enquire about the prices. "The current quote 25 per cent broken raw rice for May shipments is $246 a tonne f.o.b Kandla," he said. "We think it would be possible to export at $245 without help from the Government."
In the spot market, Indian rice is unavailable. On the other hand, Thai 25 per cent broken raw rice is quoted at $225-237 a tonne and Vietnam's at $215-220. The prices in the beginning of the year were a shade lower than $200 a tonne.
Asked if any of the enquires had been converted into firm orders, the official replied in the negative. "As of now, the buyers are just evaluating. But we expect orders to come in during May and June. During that time, there will be stocks to spare for exports," he said.
Rice production in the country is projected at around 70 mt and the trade is of the view that at least four mt could be made available for exports.
"Rice is bullish in the international market. Export surplus with Thailand and Vietnam are down. Vietnam has stopped signing deals for exports. And world rice stocks are seen the lowest since 1985," the official said.
According to trends, global rice consumption is projected at 400 mt, while production at 395 mt. That will leave a lower carryover stock. "Clearly, there is a mismatch between production and demand," he said. The Food and Agriculture Organisation has estimated global rice stocks to decline by 20 mt to 102 mt this year. China has emerged as the new buyer in the global rice market.
"In the next one or two months, India could be the only country to sell some quantity of rice. And the prices may go up," the official said.
He said the prices would be workable without any Government assistance as the price of 25 per cent broken raw rice at the delivery point of Kandla port could come to around Rs 10,000-10,200 a tonne. "If the dollar doesn't weaken against the rupee, then $245 a tonne f.o.b would be workable for exporters," he said.
Until exports were suspended, the shipments were mainly to African countries. "We still stand a chance to retain the market since they are expected to import 5-6 mt," the official said.
Grain exporters feel the country could enjoy an advantage in shipments of rice and wheat this year on firm freight rates.
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