India rice stocks are three times the target, easing supply concerns.
India rice stocks are three times the target, easing supply concerns.
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India, the world’s second-largest producer of rice, is currently sitting on a surplus of rice stocks, reaching nearly three times its target at the beginning of August, according to government sources. The surplus, combined with the upcoming new season crop expected to hit the market by October, is raising hopes of New Delhi relaxing its recent export ban on non-basmati white rice.
India, as the largest rice exporter in the world, had shocked the market with a sudden halt on non-basmati white rice exports in the previous month. Consequently, prices soared to multi-year highs, leading to concerns about food security and affordability. However, with the current surplus of rice stocks, India may be in a position to ease the export ban and stabilize prices, bringing relief to consumers both domestically and internationally.
The government sources revealed that India’s rice stocks, including unmilled husk varieties stored in state warehouses, stood at a total of 37.6 million metric tons as of August 1. This includes 24.6 million metric tons of rice and 13 million metric tons of the unmilled variety. Indian government rules mandate state-run warehouses to hold at least 13.5 million metric tons of rice, including strategic reserves of 2 million metric tons for the quarter starting July 1.
“We are quite comfortable in rice,” expressed one of the anonymous sources. This sentiment was shared due to the fact that the country is in the tail end of the current rice marketing year, netting ample stocks. Furthermore, the next crop is just around the corner, with farmers starting to harvest the new season rice from October onward.
The new season purchases by India’s state-run Food Corporation of India (FCI), the primary grain buyer, will further contribute to the rise in rice inventories. During the 2022-23 marketing year, FCI procured 84.6 million metric tons of rice paddy from domestic farmers, resulting in approximately 57 million metric tons of rice.
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The Ministry of Agriculture & Farmers Welfare reported a record-breaking rice harvest of 135.5 million metric tons in 2022-23. This success has encouraged Indian farmers to plant 23.7 million hectares of summer-sown rice so far, a 1.71% increase compared to the previous year. The revival of crucial monsoon rains in July further aided farmers in accelerating their sowing activities.
However, there is an expectation for below-average rainfall in August due to the El Nino weather pattern. This forecast, although potentially impacting rice cultivation, may not be a cause for alarm. Rice-growing states in eastern India may still receive surplus rainfall, according to the weather office. As a result, a good crop is anticipated, which would compel FCI to purchase large quantities of rice from farmers, adding to the already swelling stocks at government granaries.
B.V. Krishna Rao, president of the Rice Exporters Association, highlighted that the export ban would increase domestic supplies, subsequently driving down rice paddy prices to the government-set support or guaranteed price of 2,183 rupees ($26.40) per 100 kg. This would further urge FCI to buy more rice, potentially surpassing the required buffer norms established by the state.
Overall, India’s surplus of rice stocks offers some optimism in terms of stabilizing prices and meeting current and future demand. If the government decides to relax the export ban, it could have a positive impact on both the domestic and international market. Consumers would benefit from increased availability and affordability, while Indian farmers would enjoy greater opportunities for selling their produce. As India continues to navigate its role as a key player in the global rice market, the abundance of rice stocks provides both economic stability and the potential for substantial growth in the agricultural sector.
