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India rice rates gain, other hubs struggle to keep up

By Diptendu Lahiri
A worker spreads rice for drying at a rice mill on the outskirts of Kolkata

By Diptendu Lahiri

BENGALURU (Reuters) - Rice export prices in India inched up this week, helped by a stronger rupee and a slight uptick in demand, while other hubs in Asia struggled to compete with rates offered by the top exporter.

India's benchmark 5% broken, parboiled variety rose to $371-$374 per tonne from last week's $369-$372.

"The appreciating rupee has been forcing us to raise prices," said a Mumbai-based dealer with a global trading firm.

India has raised the price at which it will buy new-season common rice varieties from local farmers by 3.7%, the farm minister said on Wednesday.

Traders in neighbouring Bangladesh said the country has been unsuccessful in securing fresh deals since its ban on rice exports was lifted in May.

"It is nearly impossible for us to make any deal when India can offer competitive rates," a Dhaka-based trader said.

Bangladesh lifted the longstanding ban with an aim to sell as much as 1.5 million tonnes to support local farmers following a drastic drop in domestic prices.

On Thursday, the country signed an agreement with China, one of nine such deals, as part of which China will provide 2,500 tonnes of rice to Rohingya refugees in Bangladesh.

Meanwhile, in Vietnam, rates for the 5% broken rice fell to $330-$335 a tonne on Thursday, from $340-$345 last week, with a trader in Ho Chi Minh city attributing the dip to a pick-up in the ongoing summer-autumn harvest.

Another trader said Vietnam's rice shipments to the European Union could get a boost once the free trade agreement signed between the country and the EU on Sunday takes effect.

"However, Vietnamese rice exports to the EU will still face technical barriers and competition from Thailand and Cambodia," the trader said, adding the single-currency bloc will limit rice shipments from Vietnam at 80,000 tonnes a year.

Similarly, prices for second-biggest rice exporter Thailand's benchmark 5% broken variety narrowed to $395-$413 a tonne on Thursday, free on board Bangkok (FOB), from the previous week's $395-$415 range. 

"Domestic prices have dropped due to lacklustre demand but the export prices remain high because of the exchange rate," a Bangkok-based rice trader said.

A strong local currency was making Thai rice less competitive in overseas markets, traders said.

"If the baht remains strong then it will be hard for us to compete with Vietnam and India," another trader in Bangkok said.

(Reporting by Panu Wongcha-um in Bangkok, Khanh Vu in Hanoi, Rajendra Jadhav in Mumbai, Ruma Paul in Dhaka; Editing by Arpan Varghese and Deepa Babington)