INTERVIEW: Surplus, demand shift to weigh on India rice prices late Q1: Olam Agri India

Indian rice prices are likely to come under pressure from late first quarter of 2026 into the second quarter as large domestic stocks weigh on the market, while demand shifts geographically, Nitin Gupta, Deputy Country Head at Olam Agri India, told Platts, part of S&P Global Energy, in an interview.

"The market was expecting prices to soften after January because of the bumper crop, but that downside has not really played out," Gupta said. "In fact, prices firmed up by around $10-$15/mt in December."

Platts assessed Indian 5% white rice at $347/mt FOB Jan. 12, down $3/mt month over month, making it the most competitive among major Asian rice origins. On the same date, Platts assessed Thailand 5% broken white rice at $370/mt FOB, Pakistan at $384/mt FOB, Vietnam at $353/mt FOB, and Myanmar at $359/mt FOB FCL.

The firmness was driven by aggressive short covering, steady government procurement and higher prices at other origins, he said.

"Bangladesh alone bought around 400,000-500,000 mt, and similar volumes were sold into Africa, some of which is still getting executed in January and February. That short covering supported prices," Gupta said.

Despite high production, the Indian government has not released substantial volumes into the open market. "The government is still actively procuring rice, which has limited availability for private trade and prevented surplus stocks from easing prices," he added.

At the same time, prices in Thailand, Vietnam and Pakistan have also risen, keeping Indian rice competitive in export parity terms even at current levels.

Large stocks to weigh from late Q1

Gupta said the medium-term outlook remains bearish.

"India is sitting on very large stocks, close to 57 million mt as of early January, and more procurement is still to come. Eventually, this rice has to come into the open market in some form," he said.

Expectations of a bumper rabi crop could increase supply pressure, potentially lowering prices by $15-$20/mt from current levels from mid-to-late February or into the second quarter, he said.

However, exports could remain strong if demand holds up. "If demand sustains, India could export as much as or even more than 2025, which was close to 22 million mt," Gupta said.

According to S&P Global Energy CERA, India's rice exports for the marketing year 2025-26 (October-September) are estimated at 24 million metric tons, a 5.2% increase from the previous year.

Fragmentation, oversupply limit India's ability to set global rice benchmarks

"Thailand remains the benchmark in the global rice trade because it is a highly organised and consolidated market," Gupta said. "There are relatively few exporters, mills and traders, strong discipline on quality, and more rational behaviour on pricing and volumes."

"India, despite being the world's largest rice exporter and the most influential player, operates very differently," he said. "It has more than 80,000 rice mills, thousands of traders and exporters, and extremely fragmented participation, with a strong tendency to compete aggressively on price."

India is highly influential, but influence does not automatically translate into a benchmark behaviour, he said.

The current supply situation makes that challenge even more pronounced. "As long as India remains highly fragmented and the market remains oversupplied, it is very hard to see Indian rice functioning as a benchmark in the same way Thailand does."

Demand outlook

According to Gupta, near-term demand for Indian rice is subdued. "The Philippines bought about 0.9 million mt in Q1, but if Q2 stays at that level, it will be much lower than last year's 1.5 million mt. Indonesia is out of the market, and West Africa has healthy stocks after early Ramadan buying," he said.

Demand is expected to recover from late Q1 into Q2, driven by new buyers.

"Kenya, Madagascar, Malaysia and China are likely to be in the market. China alone could buy over 50,000 mt of broken rice, compensating Indonesia's buying as well. Bangladesh still has large volumes to execute," Gupta said.

Geopolitics driving volatility

Geopolitical uncertainty is increasing both opportunity and risk, Gupta said.

"When the US announced possible tariffs on Indian rice, buyers rushed to secure basmati, pulling demand forward. We saw basmati prices rise by more than $100/mt month over month on buying from Iran, Iraq, Afghanistan and Saudi Arabia," he said.

However, political flare-ups can quickly reverse sentiment. "Just in the last two days, prices corrected by about rupee 2-3/kg because of uncertainty around protests in Iran and cargo clearance," he said.

"This market is very reactive now. You cannot form a stable forward view; you have to navigate volatility."

No near-term OMSS intervention expected

Gupta does not expect a reduction in open market sales scheme (OMSS) prices.

"The government supported farmers in November and December by buying at MSP rather than releasing rice cheaply. Now global prices are $30-$50 higher than Indian prices, so there is no logic to subsidize and liquidate stocks," he said.

The market is more likely to adjust through demand than policy intervention, he added.

Climate, geopolitics, and policy risks

The biggest risks to the rice market are structural rather than cyclical, according to Gupta.

"Climate change is the biggest long-term risk to agriculture. On top of that, geopolitical instability and frequent policy changes are making the market more fragile and unpredictable," he said.

"These are tough times, but those who manage risk well and stay patient will find better opportunities ahead."