High shipping costs impact Indian rice rates in Asia
Published on: June 28, 2024.
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Indian Rice Export Prices Drop Due to Freight Charges and Competition
MUMBAI/BANGKOK/HANOI AND BENGALURU: Indian rice exporters are facing a decline in prices this week as demand slows down due to an increase in freight charges. Additionally, Thai rates have also dropped due to more competitive pricing from Vietnam, one of its major competitors in the rice export market.
India, a top exporter, has seen a decrease in prices for its 5% broken parboiled variety, which is now quoted at $541-$548 per ton this week, compared to last week’s range of $544-$552. Exporters based in Kakinada, located in the southern Andhra Pradesh state of India, explained that the surge in container freight rates has pushed buyers towards break bulk shipments. However, even break bulk rates have risen, causing buyers to momentarily pause their purchasing activities.
The Baltic Exchange, which monitors rates for dry bulk commodity shipments, reported a rise in their main sea freight index on Wednesday, mainly driven by higher rates for capesize vessels.
In Thailand, prices for 5% broken rice have dropped to $595 per ton, a decrease from the range of $615 to $620 seen last week. Traders attribute this decline to the exchange rate and sluggish demand, as Vietnam offers more competitive prices in the rice export market. A trader based in Bangkok mentioned that if Thai prices remain high while prices in Vietnam continue to drop, it will become increasingly challenging for them to sell rice. However, there is hope for the Thai market, as new supply is expected next month due to favorable rainfall conditions.
Vietnam, on the other hand, has seen a slight increase in prices for its 5% broken rice, which is currently offered at $575-$580 per metric ton, up from $570 a week ago. Despite this increase, Vietnamese rice is still about $18 cheaper than its Thai counterpart.
The recent increase in prices in Vietnam can be attributed to the decision made by the Philippine president to reduce import tariffs on rice. Traders based in Ho Chi Minh City mentioned that while prices have edged higher, they are not expected to rise significantly due to abundant supplies from the ongoing harvest. However, there have been reports of farmers in the Philippines expressing dissatisfaction with the decision to cut import tariffs.
In conclusion, Indian and Thai rice exporters are experiencing a decline in prices due to various factors, including higher freight charges and competitive pricing from Vietnam. Despite this, the market is optimistic about the upcoming supply of new rice and expects prices to stabilize.
