India's Rice Export Demand Picks Up On Weakening Rupee, Bumper Crop .

-- Philippines buyers looking at India for rice supplies

-- Indian rice prices quoting $135 per ton lower than Thai varieties

-- Weakening rupee increases export viability from Indian ports

-- Indian traders have contracted 1.2 million-1.3 million tons exports since September

NEW DELHI (Dow Jones)--Export demand for Indian rice has picked up as a fall in the rupee's value to the dollar has lowered the price of its grain, while floods in rival Thailand have hit supplies from the world's largest exporter.

India has contracted exports of between 1.2 million and 1.3 million metric tons of rice since the government lifted a ban on the grain's shipments in September. Enquiries for Indian rice have increased in recent weeks, trade executives said.

Buyers from the Philippines have initiated talks with India for purchases of common grade rice, after Indonesian buyers purchased 250,000 tons last week. Although no purchase quantities have been firmed up with buyers in the Philippines, trade executives said early indications are the order size could be as large as Indonesia's.

"Export demand is good, especially because there is a shortage internationally because of the devastating flood in Thailand," said Vinod Kumar Chaturvedi, managing director of Usher Agro Ltd. "We have the potential to emerge as the largest rice exporting country."

Thailand accounts for almost a third of global rice trade and severe floods in October not only inundated rice fields and warehouses, but also damaged ports and inland infrastructure.

The price of 5% broken rice from India is quoting $135 a ton lower than rivals such as Thailand at $440 a ton because of a fall in the rupee's value and abundant supplies after two successive bumper crops.

"Indian prices of rice would have been at least $50 per ton higher, but for the drop in the rupee's value to the dollar," said Sanjeev Garg, director of commercial at LMJ International Ltd.

The rupee has fallen about 13% against the U.S. dollar since September. The dollar touched its all-time high of INR52.725 against the rupee Tuesday and is continuing to hover in the same area.

The fall in Indian export prices consequently has made it viable to ship out some grains from ports such as western India's Mundhra--at a distance from rice bowl regions--and not just Kakinada in the southern part of the country.

Garg said the local rice price is expected to fall by INR1,000 per ton from INR20,500 per ton over the next two to three months due to supplies from a bumper summer-sown crop, but export prices may remain in the same range as the rupee could appreciate in value.

Output of the summer-sown crop is estimated at a record 87.10 million tons, while the total output in 2011-12 is expected to cross 105 million tons.

Source : online.wsj.com