MUMBAI, Aug 11 (Reuters) – India’s rice export ban has the world market bracing for related actions by rival suppliers to keep away from potential home shortages as sellers attempt to fill the ten million metric ton hole left by New Delhi, stoking issues over already excessive world meals inflation.

India’s newest restrictions are virtually an identical to these it imposed in 2007 and 2008, analysts say, which triggered a domino impact as many different nations had been compelled to curb exports to safeguard native customers.

This time across the affect on provides and costs may very well be much more sweeping, as India now accounts for greater than 40% of world rice commerce in contrast with round a 22% share 15 years in the past, ratcheting up strain on rice exporting nations corresponding to Thailand and Vietnam to comply with go well with.

“India is now much more important for rice trade than it was in 2007 and 2008. The Indian ban back then forced other exporters to implement similar restrictions in a domino effect. Even this time, they have few options but to react to market forces,” a New-Delhi primarily based grains supplier with a world commerce home stated on situation of anonymity.

The affect on costs of the world’s most consumed staple has been swift, hitting 15-year highs, after India shocked patrons final month by imposing a ban on widely consumed non-basmati white rice gross sales to dampen worth rises. New Delhi had already restricted decrease high quality damaged rice provides in 2022.

Limited provides threat an extra spike within the worth of rice, and world meals inflation, hitting impoverished customers in Asia and Africa, analysts and merchants stated. Food importers are already grappling with tight provides brought on by erratic climate and disruptions in Black Sea shipments

“Thailand, Vietnam, and other exporting countries are poised to step up their game, all in a bid to bridge the gap stemming from India’s shortfall,” stated Nitin Gupta, senior vice chairman of Olam Agri India, one of many world’s prime rice exporters.

“However, there exists a constraint in their surplus capacity for exports. This constraint could set the stage for a surge in prices at other origins, reminiscent of the notable price rally we witnessed in 2007/08.”

In 2008, rice costs reached a document excessive above $1,000 per ton after India, Vietnam, Bangladesh, Egypt, Brazil and different small producers restricted exports.

LIMITED SURPLUS

This time, rice exporters might be unable to extend exports by greater than 3 million metric tonnes a 12 months as they attempt to fulfil native demand amid restricted surplus, three sellers with world commerce homes informed Reuters.

Thailand, Vietnam and Pakistan, the world’s second, third and fourth greatest exporters, respectively, have stated they’re eager to spice up gross sales since demand for his or her crops has been rising after India’s ban.

Both Thailand and Vietnam emphasised that they may guarantee their home customers should not harm by rising exports.

“It’s unacceptable for a rice-exporting country to face tight supplies and high domestic prices,” Vietnam Minister of Industry and Trade Nguyen Hong Dien stated final week.

Pakistan, recovering from final 12 months’s devastating floods, might export 4.5 million to five.0 million tons from the present 12 months’s 3.6 million tons, in line with an official with the Rice Exporters Association of Pakistan (REAP).

But the nation is unlikely to permit unrestricted exports amid double-digit inflation, the official stated.

The main importers of non-basmati rice embody the Philippines, China, Senegal, Nigeria, South Africa, Malaysia, Cote d’Ivoire, and Bangladesh.

CHAIN REACTION

Global costs have risen by round 20% since India’s ban. An extra 15% acquire might set off restrictions by Thailand and Vietnam, in line with merchants at worldwide buying and selling firms.

“The question is not whether they will limit exports, but rather how much they will restrict and when they will take such measures,” stated a New Delhi-based dealer.

This week, rice costs in Thailand and Vietnam soared to 15-year highs as patrons rushed to cowl shipments to compensate for the decline in India’s exports.

EL NINO CONCERNS

Rice is a staple for greater than 3 billion individuals, and almost 90% of the water-intensive crop is produced in Asia, the place the emergence of dry El Nino climate threatens crops in key producing nations.

After below-normal rainfall in June and July, Thailand has suggested farmers to curtail the world underneath the second rice crop.

In India, erratic monsoon rainfall distribution led to flooding in some rice-growing northern states, at the same time as some japanese states lacked precipitation to start out planting.

Good monsoon rainfall is required for regular manufacturing, which might permit New Delhi to reverse the ban on exports, stated B.V. Krishna Rao, president of the Rice Exporters Association of India.

Rao stated solely Indian provides can restore equilibrium within the world rice market.

“We will have to see for how long India’s restrictions remain in place. The longer the ban is in place the harder it will be for other exporters to compensate for the shortfall,” stated Peter Clubb, an analyst on the International Grains Council (IGC) in London.

Reporting by Rajendra Jadhav; Editing and extra reporting Naveen Thukral in Singapore; Additional reporting by Khanh Vu in Hanoi, Panarat Thepgumpanat and Chayut Setboonsarng in Bangkok;
Editing by Shri Navaratnam

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