Demand For Indian Rice Up on Higher Thailand Price.

HO CHI MINH CITY (MarketWatch) -- As rice prices rise and supply tightens in Thailand, the world's largest exporter, buyers are increasingly turning to India to meet their needs though infrastructure bottlenecks may slowdown shipments, trading executives said.

Thailand controls close to a third of global rice exports but India has started eating into that share after resuming shipments last month after the government relaxed a more than three-year-old ban on exports of ordinary rice.

Even traditional buyers of Southeast Asian grades of rice are now eyeing the Indian grain.

In a recent tender, Iraq purchased 30,000 metric tons Indian 5% broken white rice at $573/ton, basis cost, insurance and freight, one of the first such sale of ordinary rice to the Middle East country in several years.

More such sales from India are likely to take place in the next few months, said Karan Chanana, chairman of New Delhi-based Amira Group who sold the rice to Iraq.

In the parboiled grades, India has literally snatched the Thai rice market. Unlike other grades that have several suppliers, Thailand dominated the trade in parboiled rice during India's absence.

This year, Thailand exported 350,000 tons parboiled rice on average each month until August. September exports fell to around 300,000 tons.

No fresh sales are taking place and parboiled rice exports in October are likely just above 100,000 tons in October, said Chookiat Ophaswongse, former president of Thai Rice Exporters Association.

In less than two months, India has sold more than 500,000 tons parboiled rice, mostly to buyers in Africa and shipments have started though there are serious concerns over the pace of shipments.

India may not be able to export more than 500,000 tons of rice a month, including the premium variety, Basmati grades, due to inland and port bottlenecks while Thailand had exported more than double that amount each month, said Jeremy Zwinger, chief executive of The Rice Trader, a global consultancy.

India's parboiled rice export sales are between $435-$490/ton, FOB compared with Thai offers at $600/ton.

In 2007, India's discount to Thailand in parboiled rice was around $30/ton and is now more than $160/ton, resulting in a large shift in trade.

Traders said many African buyers and transnational companies have postponed shipments from Thailand due to cheaper offers from India.

Chookiat confirmed that shipments of around 150,000 tons parboiled rice to Africa are postponed for the next few months.

It isn't just in commercial trade that demand for Indian rice has increased. Even the United Nations' World Food Program is buying Indian rice and has recently purchased three cargos totaling 52,000 tons of 25% broken white rice from New Delhi-based Emmsons International, trading executives said.

Source : marketwatch.com