Global Rice News

Pakistani Rice Market Set for Strong Growth in 2024

The Pakistani rice market is expected to experience significant growth in 2024, continuing the positive momentum seen in the second half of 2023. Despite concerns surrounding macroeconomic conditions and the potential relaxation of India’s rice export restrictions, experts remain optimistic about the industry’s outlook.

After a slow start in the aftermath of devastating floods in 2022 and India’s non-Basmati white rice export ban in July, Pakistan’s rice market experienced a surge in exports in the second half of the year. This growth was driven by near-record crop production, a large exportable surplus, and competitive prices.

Looking ahead to 2024, the US Department of Agriculture forecasts a 64% year-on-year increase in Pakistani milled rice production, reaching 9 million metric tons in the marketing year 2023-24. This would be the second-largest crop ever, slightly below the record set in MY 2021-22. Additionally, rice exports are projected to reach a new record of 5 million metric tons in MY 2023-24, surpassing the previous high of 4.8 million metric tons in MY 2021-22.

Increased Demand and Favorable Conditions

One of the key factors driving growth in Pakistan’s rice market is the export ban imposed by India. With Indian rice no longer available, buyers from Africa and the Far East have turned to Pakistani suppliers, contributing to increased demand. This trend is expected to continue until India relaxes its export policy.

In addition to rising demand, Pakistani exporters have been able to offer competitive prices in the international market due to a large exportable surplus. However, concerns have been raised about potential bullish price trends due to higher demand and the impact of El Nino on crop output in Southeast Asia.

Despite these challenges, experts believe that Pakistani rice will find new markets in the first half of 2024, including Iran. However, Chinese demand is expected to remain subdued until the fourth quarter of the year due to high global prices.

The African market is expected to remain a leading destination for non-Basmati rice exports from Pakistan. The country enjoys logistical advantages in these markets and can offer more competitive Free on Board (FOB) prices compared to suppliers in Southeast Asia.

Potential Risks and Outlook

While the Pakistani rice market has seen significant growth, there are still potential downside risks. The rally in prices was largely fueled by the Indian export ban, and any indication that India may lift the ban could lead to a decrease in market prices. However, experts believe that India is unlikely to change its stance until after the general elections, which are expected to take place in May.

Another risk facing exporters and millers is the potential drop in global rice prices. With short-term bank credit playing a crucial role in the industry, a decline in prices could have a significant negative impact. Additionally, foreign exchange volatility and inflation rates add further uncertainties to the market.

Basmati Market Stability

Market participants expect the Basmati market to remain stable in 2024, following a good crop in 2023. While demand slowed towards the end of the year, it is expected to pick up in the first quarter of 2024. The European Union and the Middle East will continue to be the main markets for Pakistani Basmati rice.

However, Basmati prices may not reach the highs seen in 2023. Tight supply early in 2023 due to the previous year’s floods led to an increase in prices, but they dropped significantly in the last quarter. The increase in freight rates to the EU, coupled with higher minimum export prices for Indian Basmati, may impact Pakistani Basmati export prices.

Overall, the Pakistani rice market is poised for strong growth in 2024, driven by increased production, rising demand, and favorable market conditions. However, exporters and millers must navigate potential risks and uncertainties to ensure continued success.

Source: SP Global Rice Market News