Rice prices in India rose on Thursday (03/08) due to the strongest rupee in two years, while markets in Thailand and Vietnam remained subdued ahead of harvests expected this month, traders said.
In India, the world’s biggest rice exporter, 5 percent broken parboiled rice rose by $6 per tonne to $406-$409 due to a rally in the rupee to its highest level in two years, even though demand remained weak.
“The rupee is forcing us to raise prices, which are higher than competing countries,” said a New Delhi-based official with a global trading firm.
The rupee has risen nearly 7 percent so far in 2017, reducing exporters’ returns.
Lower supplies of the grain ahead of the harvest season expected at the end of September also raised prices for local paddy rice, traders said.
“We have to raise export prices accordingly,” said an exporter in Kakinada in the southern state of Andhra Pradesh.
Last month, India’s high prices resulted in a suspension of a government-to-government deal with Bangladesh, which has been looking to import rice to replenish stocks hit by flash floods.
The deal was called off this week because India did not respond with a revised offer in time, the chief of Bangladesh’s state grain buyer told Reuters before leaving for Cambodia, where a 1 million tonne rice deal was agreed.
Thai benchmark 5 percent broken rice on Thursday dropped to $390-$392 a tonne, free-on-board (FOB) Bangkok, from $395-$408 last week.
“The market has gone quiet. Prices would have dropped further but they are being held up by the strong exchange rate,” a trader in Bangkok said.
The baht was trading at 33.26 against the dollar, the strongest in more than two years.
Thailand’s off-season white rice grains, grown mainly in the central region, are expected to arrive from mid-August through to September. Thailand has been battling floods in its main rice-growing northeastern region since late July.
Thailand is likely to export 11 million tonnes of rice this year, the government said this week, higher than its target. It has exported 6.3 million tonnes so far, an increase of 16 percent from the same period last year.
Vietnam’s 5 percent broken rice extended its flat trend at $400-$405 a tonne, FOB Saigon, on low foreign demand and high commercial prices.
“We hope the market to be more vibrant by late August when the summer-autumn harvest starts,” said a trader in Ho Chi Minh City.
Another trader said there were a few queries from African buyers but no specific deals have yet been agreed.
Vietnam has exported an estimated 3.4 million tonnes of rice in first seven months of this year, up 18.6 percent from a year earlier.
Thailand and Vietnam are the world’s second and third biggest rice exporters.