India mulls lifting ban on 100% broken white rice: sources

The Indian government is mulling to lift the ban on exports of 100% broken white rice (WR), industry sources told S&P Global Commodity Insights, a move which is likely to boost India's WR shipments.

India lifted the ban on non-basmati white rice exports and introduced a minimum export price of $490/mt in late September. The country later scrapped the Minimum Export Price (MEP) of $490/mt Oct. 23. However, the ban on 100% broken WR continued.

In order to ensure adequate availability of broken rice, India amended the export policy of broken rice effective Sept. 9, 2022 from "Free" to "Prohibited", thus banning exports of broken rice from India.

As per sources, lifting the ban on 100% broken WR is crucial to meet the humanitarian food needs of many importing countries.

A source involved in discussions with the Indian government regarding the ban on 100% broken WR told Commodity Insights that they have formally requested the government to lift the restriction. The Indian government is reportedly considering this proposal. The source said that the ban should be removed because molasses can be used for ethanol production, making the restriction unnecessary. They also highlighted the strong demand for this rice variety in West African countries, emphasizing that maintaining the ban is unjust on humanitarian grounds.

India produces 15 million mt of broken white rice, and lifting the ban could unlock an export potential of 1.6 million mt. Additionally, the source said that the continued ban encourages corruption, as some exporters are mislabeling broken rice under different HS codes to bypass the restriction.

The market saw mixed sentiments regarding the government's likely decision to remove the ban on brokens.

"Allowing broken exports will shrink the 25% WR market as most exporters mix brokens with 25% WR. It is possible that India might lose 25% WR market to brokens. Nonetheless, it is likely to have a sudden impact on white rice prices, and broken market would take a long time to stabilize," a trader noted.

They also added that the Food Corporation of India's stock is only milled rice and paddy, so for ethanol production, the government and ethanol industry buy brokens from millers. If the exports are open, this would create more pressure on the limited supply of brokens, raising its prices. Even if the government decides to open broken exports, they might have to restrict it at one point due to growing demand from the ethanol industry, and that would disrupt the market again.

Any decision to lift India's export ban on 100% broken WR is expected to enhance rice exports and likely to pressure prices in the region of the same variety from Pakistan, Vietnam and Myanmar.

"Pakistan's broken rice prices will go down as Indian broken rice becomes more competitive, especially affecting African market buyers for Pakistani broken rice. However, if China starts buying broken rice, it will support the Pakistani market. The main destinations for Pakistani broken rice include Guinea, Guinea-Bissau, Senegal, and Nouakchott," a Pakistani rice exporter said.

Thai A1 Super 100% broken WR is primarily used domestically for noodles and beer production, limiting its export potential. Consequently, the local demand in Thailand ensures that exports remain unaffected.

"Most Indian 100% broken white rice is exported to China. Meanwhile, exports of Thai A1 Super 100% broken white rice are limited, as it is primarily used for blending with 5% and 25% broken white rice. Local demand is significant, with the rice being commonly used in local consumption for noodles and beer production so it is not going to impact exports," according to a Bangkok-based trader.

As of Nov. 21, Platts assessed prices for various broken rice categories from suppliers of various origins. Pakistani 100% broken WR was assessed at $372/mt FOB, down by $85/mt year-on-year, while Thai A1 Super 100% broken WR was at $393/mt FOB, down by $79/mt year-on-year Nov. 21.

Vietnamese 100% broken WR was assessed at $369/mt FOB, down $120/mt year-on-year, and Myanmar B1 & B2 broken rice was priced at $330/mt FOB FCL, down $100/mt year-on-year.

In comparison, Indian 100% broken WR was priced at $320/mt FOB on Sept. 8, 2022, before the ban.

India is forecast to export 20.5 million mt of rice in the marketing year 2024-25 (October-September), up 38.5% year-over-year, according to Commodity Insights data.