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New Delhi: India eased curbs on exports of premium rice to allow shipments of an estimated one million tonnes of the staple, becoming one of the last countries to relax trade restrictions that had lifted world prices to record highs.
The world's second-largest producer has allowed exports of the aromatic, long-grained Pusa-1121 grade from October 15 - a move expected to soothe supply concerns in the market and crimp sales from Thailand, the world's top exporter, by 15 per cent next year.
India banned exports of non-basmati grades this year when dwindling stocks and rising prices triggered fears of shortages of the staple.
The export ban for regular grades will be reviewed after the new crop is harvested by November.
The premium Pusa-1121 grade was being considered for classification as a basmati variety, which in India is cultivated mainly for export and can be sold freely overseas as it does not affect politically sensitive supplies for millions of poor consumers.
The government has set a floor price of $1,200 per tonne for the export of Pusa-1121 rice, but traders said it was already commanding a price of more than $1,400 per tonne.
"The economics of exporting 1121 are in favour of the farmer. It enables a higher price for its produce without affecting domestic prices," said R.S. Seshadri, a director at Tilda Riceland, India's biggest basmati rice exporter.
Exporters in Thailand said the country's exports in the last quarter of this year may tumble after India steps into the market with additional supplies. But a government intervention scheme would protect sales in the short term. "We could see a significant drop in Thai rice exports as demand would be shared by India, but I don't expect prices to fall, especially in September, as the buying scheme is still in place," said Chookiat Ophaswongse, president of the Thai Rice Exporters Association.
He said Thai rice exports were likely to fall to 8.5 million tonnes in 2009 from an estimated 10 million tonnes this year.
The president of the All India Rice Exporters Association, Vijay Setia, said about one million tonnes of Pusa-1121 would be exported in the year to September 2009, but Tilda's Seshadri said exports would be about half a million tonnes.
The benchmark 100 per cent B grade white rice was quoted at $720 per tonne yesterday, up from last week's $700 per tonne on the back of firm demand from Nigeria.
Prices are expected to stay above $700 per tonne, equivalent to the 14,000 baht per tonne the Thai government is paying farmers for paddy rice in a bid to shore up prices during the harvesting period.
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