Platts-assessed Asian rice prices plunge to multi-month low amid India's export ban U-turn

Asian rice prices have plunged to multi-month lows following India's decision to lift its export ban on non-basmati white rice, sparking increased competition among major exporters like Pakistan, Myanmar, and Thailand, market sources told S&P Global Commodity Insights.

As buyers shift to more competitive origins, the global rice market faces heightened pricing pressure, potentially reshaping trade dynamics.

India has lifted the ban on non-basmati white rice exports, introducing a minimum export price of $490 per metric ton as per the Ministry of Commerce and Industry's notification on Sept. 28.

The government banned WR exports in July 2023 to enhance domestic supply and control inflation.

"Prices won't stay high for the next two months due to pressure from Indian markets, especially with a bumper crop expected," Dev Garg, vice president of Indian Rice Exporters Association, said.

The Food Corporation of India has 23.5 million metric tons of surplus rice under OMSS, which will be released into the market, further driving prices down, he added.

"Additionally, by March 31, 2025, India anticipates a surplus paddy production of 27.5 MMt, leading to a total surplus of 50 MMt. Even in an optimistic scenario, exports won't exceed 5 MMt-6 MMt, leaving a supply surplus. This could lead the government to relax the MEP if pressure builds up in the local markets, though no such discussions are happening yet," Garg said.

He also pointed out that if international rice prices keep falling, there will be little incentive for buyers to choose Indian rice, and the government will need to take steps to address the situation.

India, being one of the largest producers and exporters in the world, is exerting pressure on prices across all origins following its renewed export activities. Market participants are waiting for the Indian market to stabilize so prices in other origin markets can be adjusted accordingly.

Platts assessed India 5% WR at $490/t FOB Oct. 9 at MEP.

Limited impact on Vietnamese rice prices

The removal of India's ban on white rice exports has had a limited impact on the Vietnamese white rice market as the summer-autumn crop supply is limited, sources said.

“With the MEP of $490/t [in India], the African and some Middle East buyers may go back to India, but I don't think the price is attractive for Philippines buyers," said Leocadio Sebastian, former agriculture undersecretary, Department of Agriculture, Philippines. "The Vietnamese and Thai producers can offer very competitive prices to ASEAN buyers, equal or a bit higher than India's MEP."

“The stock from April-July crop in southern Vietnam is getting low. This is the period that Vietnam rice can cost a bit higher than Thai rice. Thailand has high stock inventory at this time with new harvest coming in,” Sebastian added.

Consequently, buyers are exploring alternatives from other origins, such as Pakistan, India and Myanmar. A Philippines-based importer said it was actively checking prices from these countries.

As of Oct. 9, Platts assessed Vietnamese 5% WR at $529/t FOB, a near 14-month low. Despite this, Vietnamese 5% WR rice prices remain the highest in Asia.

Bearish trends in Thai market

The Thai rice market is also experiencing a bearish trend following India's recent decision to lift its rice export ban.

A Thailand-based source said the Thai rice market will see fresh supplies in November-December, primarily for Hom Mali varieties.

“Bulk supplies of WR are expected to become available mostly from January onwards," the source said. "Prices in Thailand are anticipated to decline as prices in other origin markets are also falling; however, at present, Thailand doesn't have much paddy available until the new supplies arrive.”

The source also noted that buyers from the Philippines are unlikely to purchase from India, as Vietnam has a shipping advantage.

In the meanwhile, some Thai exporters have paused offerings due to significant price volatility.

On Oct. 9, Platts assessed Thai 5% WR at $509/t FOB, marking a 15-month low.

Stiff competition in Pakistani rice market

The Indian government's decision coincides with bulk rice arrivals in Pakistan in October and is likely to put pressure on Pakistani rice prices.

"India's decision to lift the ban on WR exports aligns perfectly with Pakistan's timing, as our season is just starting; otherwise, we would be burdened with high-cost paddy," a Pakistani exporter said.

The market is expected to self-correct by adjusting prices among different origins in response to the increased supply of rice, sources said.

"With India lifting the WR ban, the market is expected to recalibrate," another Karachi-based exporter said. "I believe that WR prices will revert to pre-COVID levels, signaling a bearish trend for all origins compared with current prices, particularly with increased supply from Pakistan, India, Thailand and Vietnam.”

Platts assessed Pakistani 5% WR at $479/t FOB on the day, down 11.3% from Sept. 27 before India lifted its export ban. This marks the lowest price for Pakistani 5% WR in 18 months.

Few Pakistani exporters also noted that India's reopening of rice exports could prompt buyers to renegotiate deals if there is a significant difference in prices being offered by the two origins.

Supply challenges in Myanmar

Market participants in Myanmar believe that prices are unlikely to decrease significantly in the coming days, as the market is facing a supply crunch and prices are regulated by the government.

"It's challenging to gauge the impact of India's ban lift on Myanmar rice prices at this time," a Myanmar-based exporter said. "However, Myanmar is currently experiencing supply challenges due to flooding, and prices are primarily monitored and overseen by the Myanmar government. Therefore, I anticipate that India's decision will have a limited effect on Myanmar prices eventually."

Another Singapore-based trader also said that the market is likely to be relatively stable. “Myanmar's issues have always been with the freight, and not much with the FOB prices.”

Platts assessed Myanmar 5% WR at $499/t FOB Oct. 9, a near 15-month low.

The lifting of India's export ban on WR is likely to intensify competition among major rice-exporting countries, resulting in lower prices and prompting buyers to explore more competitive sourcing options.