India to offload over 20 mil mt of rice from reserves, pressuring prices

The Indian government's allocation of over 20 million mt of rice under the new open market sale scheme released July 31 has triggered softer sentiment in the market, with prices likely to drop in the coming days, according to market participants.

With this new allocation, it is likely that prices for other origins like Thailand and Vietnam would also soften to stay competitive as their new crop harvest continues.

"This is a huge allocation of rice to states under OMSS-D, which is good for the overall ecosystem and will help mitigate the record surplus stock position," Dev Garg, vice president of the Indian Rice Exporters Federation, said.

"This will also support in preventing systemic loss. Definitely, there will be a deflationary impact on prices. Local rice prices are likely to get suppressed, which in the end would give India a competitive advantage over other origins like Pakistan, Thailand and Myanmar," Garg added.

According to an official notification released on July 31, 2.5 million mt of 25% broken rice will be sold to private parties and cooperatives through e-auction, and 5 million mt of 10% broken rice will be sold to private players through e-auction. 3.6 million mt will be sold to states at Rupees 22,500/mt ($257/mt) and 5.2 million mt to ethanol distilleries (including stock already sold) at the same rate by end-October, the notification said.

"The impact on rice prices is not immediate, as information and guidelines on how they will distribute rice through OMSS are yet to come. The upcoming crop also looks good based on sowing data and heavy rainfall, hence pressure on prices will be there in the long term," a Raipur-based exporter said.

"This tends to reduce the export price, and is going to affect the other rice export countries," an Indian exporter said.

"It will be affecting the 2026 market since more exporting will happen in October", they added.

Amid anticipation of increased supply, buyers urged caution.

"Buyers are scared now as this may cause another oversupply," a Benin-based importer said

Platts, part of S&P Energy, assessed West Africa parboiled rice 5% STX CFR Cotonou at $441/mt on July 31, $2/mt down on the week.

While prices for all Indian rice varieties were slow to react, Thai exporters have moved quickly.

A Thai rice exporter lowered its price for PB 5% and PB 100% by $15/mt on the day, while another exporter lowered PB 100% offer by $4/mt on the day, both citing that India's OMSS policy would pressure Thai prices further.

Platts, part of S&P Energy, assessed Thai PB 100% at $364/mt FOB, $4/mt down on the day, while Indian PB 5% was assessed at $369/mt FOB, $10/mt down week on week.

India is expected to export 23 million mt of rice in MY 2025-26 (October-September), 6% lower year on year, according to S&P Global Energy projections.