India banned the exports of non-basmati white rice with fast impact late Thursday, the newest within the authorities’s effort to rein in excessive meals costs.

The Ministry of Consumer Affairs mentioned the ban would assist guarantee “adequate availability” of non-basmati white rice in India, in addition to “allay the rise in prices in the domestic market.”

India is the world’s leading rice exporter, accounting for greater than 40% of the worldwide rice commerce, in addition to the second-largest producer after China.

Analysts informed CNBC this week’s ban may ship already elevated costs capturing even larger, compounding results from the nation’s September ban on shipments of broken rice.

“Global rice [supplies] would drastically tighten … since the country is the world’s second top producer of the food staple,” mentioned Eve Barre, ASEAN economist at commerce credit score insurer Coface.

Barre mentioned Bangladesh and Nepal could be hardest hit by the ban, as each international locations are high export locations.

The ban may additionally exacerbate meals insecurity for international locations closely reliant on rice, agriculture analytics agency Gro Intelligence predicted in a recent report revealed earlier than the announcement.

“Top destinations for Indian rice include Bangladesh, China, Benin, and Nepal. Other African countries also import a large amount of Indian rice,” Gro Intelligence’s analysts wrote.

According to the Ministry of Consumer Affairs, non-basmati white rice constitutes about 25% of India’s rice exports.

Affected importers could flip to different suppliers within the area, like Thailand and Vietnam, DBS Bank senior economist Radhika Rao mentioned.

“In addition to a reduction in global rice supply, panic reactions and speculation on global rice markets would exacerbate the increase in prices,” mentioned Coface’s Barre.

Prices are already hovering at decade highs, partly attributable to tighter provides when the staple grew to become a horny different as costs of different main grains surged following Russia’s invasion of Ukraine in February 2022.

Wheat costs jumped this week after Russia withdrew from the Black Sea grain deal. The settlement had sought to forestall a worldwide meals disaster by permitting Ukraine to proceed to export.

“Rice inflation has already accelerated from an average 6% year-on-year last year to nearly 12% in June 2023,” DBS’ Rao mentioned.

Rough rice futures rose 1% larger to face at $15.8 per hundredweight (ctw) following India’s announcement.

The South Asian nation is wrestling with excessive vegetable, fruit and grain costs. Prices of tomatoes in India have surged more than 300% in current weeks attributable to antagonistic climate. A Reuters ballot predicted the nation’s inflation seemingly hit 4.58% year-on-year on hovering meals costs.

Rabobank senior analyst Oscar Tjakra predicted international rice costs will rise additional attributable to India’s share of the worldwide market. Tjakra predicted costs may even surpass second-quarter highs when tough rice hit $18-levels per cwt.