The Indian government on Thursday unveiled its latest move to curb high food prices in the country. As a major rice exporter in the world, India will export about 22 million tons of rice in 2022, accounting for more than 40% of the world’s rice exports. This ban will undoubtedly have a certain “lethal effect”.
Analysts have pointed out that this week’s ban could further soar already rising rice prices, adding to the impact of India’s ban on the shipment of broken rice last September. It has triggered concerns in the international market about further rises in global food prices. BV Krishna Rao, chairman of the Indian Rice Exporters Association, even believes that this move may disrupt the international market to a greater extent than the Russia-Ukraine conflict.
In 2022, my country’s rice import volume will reach 6.19 million tons, exceeding the import quota of 5.32 million tons for the first time. How will India’s ban affect China?
India “starts” with rice again
According to CCTV news, on July 20 local time, the Indian government announced that in order to ensure the supply of the domestic market, India will ban the export of rice except parboiled rice and basmati rice, effective immediately. The move sparked concerns about further exacerbation of global food inflation.
India is the world’s largest rice exporter. Last year, its rice export volume reached a record 22.2 million tons, accounting for more than 40% of the world’s total export volume, even surpassing the total export volume of other major rice exporting countries Thailand, Vietnam, Pakistan and the United States.
The export volume of rice affected by this export ban is about 10 million tons, mainly rice and broken rice varieties other than basmati rice, accounting for nearly half of India’s total rice exports last year. These are also lower-priced varieties, mainly exported to the Philippines, Indonesia, and African countries such as Benin, Angola, and Cameroon. Basmati rice, which is not affected by exports, is a long-grain basmati rice, mainly exported to the Middle East and Europe, with a higher price.
This is not the first time that the Indian government has “handled” rice. In September last year, India imposed a 20% export tax on rice except parboiled rice and basmati rice, and banned the export of broken rice to ensure domestic food supply. The restrictions were not lifted until November 29.
Global rice prices rise further
CME Group crude rice futures rose 1% to $15.80 a hundredweight after the ban was announced. “Global rice (supply) will tighten significantly … as the country is the world’s second-largest grain producer,” said Eve Barre, an ASEAN economist at trade credit insurer Coface Services.
Tight supply is bound to lead to a further rise in rice prices. International rice prices are already hovering at 10-year highs, partly because global demand for the rice has grown stronger and its supply has tightened since the conflict between Russia and Ukraine erupted last year. Rice has emerged as an attractive alternative as the Russia-Ukraine conflict has sent prices of most staple grains soaring. Barre added, “In addition to the factor of reduced global rice supply, panic reactions and speculation in the global rice market will exacerbate price increases.”
BV Krishna Rao, chairman of the Indian Rice Exporters Association, even believes that this move may disrupt the international market to a greater extent than the Russia-Ukraine conflict.
Oscar Tjakra, senior analyst at Rabobank, predicted that rice futures could even surpass the highs seen in the second quarter, when rough rice hit $18 a hundredweight.
“Rice inflation has accelerated from an average of 6% last year to almost 12% in June 2023,” said Radhika Rao, senior economist at Singapore’s DBS Bank.
Affected importers may turn to alternative suppliers in regions such as Thailand and Vietnam, Rao said.
Before the announcement of the ban, a report released by the US agricultural data analysis company GroIntelligence predicted that the ban may also exacerbate food security uncertainty in countries that rely heavily on rice.
Major export destinations for Indian rice include Bangladesh, China, Benin and Nepal. Other African countries also import large quantities of Indian rice.
Does it have a big impact on China?
Domestic paddy prices are currently on the rise, as are global prices. The south is the main rice producing area in my country, and the sown area of rice accounts for about 94% of the country. Since the middle and late June, many places in the south have experienced continuous heavy rainfall, which has caused the early rice in the stage of heading, flowering and grain filling to face the high risk of “rainwashing grass flower”, which may affect the yield and quality of early rice. However, my country’s rice output has exceeded demand for many years in a row, and the stock is sufficient.
According to statistics released by the General Administration of Customs, during June 2023, my country’s total rice imports will be 170,000 tons, a decrease of 110,000 tons from the previous month. During the period from January to June, my country’s cumulative rice import volume was 1.81 million tons, a year-on-year decrease of 74.6%.
According to statistics released by the General Administration of Customs, during June 2023, my country’s total rice exports will be 120,000 tons, an increase of 10,000 tons from the previous month. From January to June, my country’s cumulative rice export volume was 530,000 tons, a year-on-year decrease of 49.1%.
From the perspective of importing countries, in June 2023, the export volume of various countries showed a slight adjustment trend. According to my country’s import volume, the order is Vietnam, Thailand, Myanmar, Cambodia, India and Pakistan. The imports were 83,900 tons, 25,900 tons, 21,000 tons, 20,900 tons, 13,700 tons and 1,700 tons respectively. This month, Vietnam is still the largest importer of rice in my country, while India is only the fifth largest importer of rice.
In the first five months of this year, my country imported 1.64 million tons of rice, a year-on-year decrease of 43.9%. Affected by the El Nino phenomenon, rice production in major rice producing countries such as India and Vietnam has been affected. Market expectations are not optimistic, and rice export prices continue to rise. Although my country is the world’s largest rice importer, its total imports account for a very small portion of my country’s rice output.
Domestic rations are safe and secure
In 2022, my country’s rice imports will reach 6.19 million tons, a year-on-year increase of 24.8%, exceeding the import quota of 5.32 million tons for the first time, exceeding the import quota by 870,000 tons. Broken rice imports accounted for more than 50%. The main reason is that feed varieties substitute each other, especially broken rice has obvious import cost advantages compared with corn and wheat, which has led to the increase in imports under the demand for feed substitution.
Strong feed demand has contributed to an increase in imports of broken rice. According to feed companies, in 2022, 15% to 20% of broken rice will be added to some medium and large pig breeding feeds. In 2021, my country will import a total of 2.518 million tons of broken rice; in 2022, it will import a total of 3.527 million tons of broken rice, of which 2.0187 million tons will be imported from India, accounting for 92.6% of the rice imported from India.
Even though my country has seen relatively large import growth in the past two years, my country’s rice import sources are diversified and relatively stable. In 2022, my country’s main sources of rice imports will be India, Pakistan, Vietnam, Thailand, and Myanmar, accounting for 35.2%, 19.3%, 13.9%, 13%, and 12.9% of total imports, which are relatively scattered. In this way, even if there is a “broken chain” in some countries, it will not have a major impact on my country’s rice imports.
my country’s rice imports have slowed down this year. In fact, my country’s rice imports in the first quarter have fallen by nearly 40% year-on-year. my country is the world’s largest rice producer, with bumper rice harvests year after year, overall loose market supply and demand, relatively stable consumption, and absolutely safe food rations.
(Article source: Upstream News)
Article Source: Upstream News
Original title: The impact of India’s rice export ban may exceed the conflict between Russia and Ukraine, and will it have a big impact on China?
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2023-07-21 14:05:58
