Rice exports to be robust even as output set to fall

India’s rice exports during the current calender year (CY 2005) are expected to increase to 4.5 million tons even as production is set to decline and stocks plummet. According to official statistics, exports for the period January through May reached 2.5 million tons. Shipment data compiled from private sources show large exports in June and July, mostly to African countries and Saudi Arabia. Although rice exports to Bangladesh have declined sharply since May, a resumption in exports to Bangladesh over the coming months is likely. This follows the Bangladesh government’s plan to import rice to meet likely domestic shortages.

According to preliminary official trade data, rice exports remained strong in May at 425,000 tons (100,000 tons basmati and 325,000 tons non-basmati), despite a significant fall in exports to Bangladesh. Exports were mainly to Nigeria, Saudi Arabia, South Africa, Ivory Coast, and other African countries. January-May 2005 exports totaled a little over 2.5 million tons. Considering the high export volume during January-May, continuing heavy exports to Saudi Arabia and African countries, and likely resumption of exports to Bangladesh in coming months, CY 2005 exports are estimated to reach around 4.5 million tons.

   According to industry sources, an Indian rice exporter made the lowest offer, at $258.75 per ton, to supply 20,000 tons of parboiled rice against the Bangladeshi tender for 50,000 tons, although a final decision is still pending. According to a report by  GLobal Agriculture Information Network (GAIN), government rice procurement in marketing year (MY) that ended in June 2005 reached a record 24.2 million tons, compared with the previous record of 22.9 million tons in MY 2003/04. However, significant  offtake through the public distribution system (and ostensibly some leakage into the export market) caused stocks to plummet to 7.8 million tons on August 1, 2005. Stocks are expected to further decline to around 4 million tons by October 1, 2005.

  This would be the lowest level since 1990, 2.1 million tons below the October 1, 2004, stocks level; and 1.2 million tons below the government’s desired minimum buffer stock level. Gain, recently, revised its MY 2005 rice production forecast downward to 86 million tons in light of the present monsoon scenario and the progressive planting report. Despite a late start and slow initial progress, the monsoon advanced swiftly during the last week of June to cover the entire country by June 30, two weeks ahead of the normal date.