Rice Prices Set to Climb Further after India Export Ban

With prices anticipated to rise significantly over the next few days, three traders claimed that the Asian rice trade paused on Friday to process India's ban the day before on a significant portion of its exports of the staple grain.

India, which exports 40% of the world's rice, ordered a halt to its main rice export category on Thursday in an effort to lower local prices, which have recently risen to multi-year highs as unpredictable weather threatens production.

"Rice prices are going to go up further in the export market. We expect a minimum gain of around $50 a metric ton and it could be $100 or even more," said one Singapore-based trader at an international trading company.

"Right now, everybody - sellers as well as buyers - are waiting to see how much the market goes up," the trader said.

Two other traders, one in Singapore and the other in Bangkok, said they expected a similar gain in prices. The traders declined to be identified as they are not authorised to speak to media.

"We haven't heard of any trades done today but buyers will have to pay higher prices to get cargoes as India's decision has taken out large volumes from the market," the second Singapore trader said.

The move by India to forbid rice exports comes at a time when the world wheat market has experienced significant increases, reviving concerns about skyrocketing food prices.

This week saw the highest weekly increase in wheat prices in more than 16 months as concerns over the world's supply were sparked by Russian attacks on Ukrainian ports.

Nearly 90% of the water-intensive crop, which is a mainstay for more than 3 billion people, is grown in Asia, where the dry El Nino weather trend is anticipated to reduce production.

Suppliers in Thailand, the second-largest exporter in the world, were awaiting price information before finalizing new agreements.

"Exporters will not want to sell, they won't know what prices to quote," Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, told Reuters. "Some traders expect prices could go as high as $700-$800 per (metric) ton."

On the anticipation of India's prohibition, rice prices had been rising in the major exporting nations.

Before India's late-Thursday announcement, Vietnam's 5% broken rice was being offered for $515 to $525 per metric ton, its highest price since 2011.

The price of Thailand's 5% broken rice increased to $545 per metric ton, which is the highest price since February 2021, while India's 5% broken parboiled type was hovering this week near a five-year top at $421 to $428 per metric ton.