Nov. 17 (Bloomberg) India, the second-most populous nation, is in talks with Thailand and Vietnam to secure rice supplies after a drought in half the country destroyed crops.
A panel of ministers will discuss the proposal on Nov. 20, Trade Minister Anand Sharma told reporters in New Delhi. Imports will be under government-to-government contracts.
Purchases by the second-biggest producer may tighten rice supplies that have been strained because of weather disruptions to crops in the Philippines, the biggest buyer. India may become a net importer for the first time in two decades, and may buy 3 million tons, Samarendu Mohanty, a senior economist at the International Rice Research Institute, said in an interview Oct. 29.
India’s rice production may decline 18 percent to 69.45 million tons from a record 84.58 million tons last year after the driest monsoon since 1972 ravaged crops, according to the farm ministry. The Philippines is accelerating purchases for 2010 supplies after two storms destroyed about 1.3 million tons of the grain.
In comparison, exports from Thailand, the top shipper, may increase to a record of more than 10 million tons next year, fueled by demand from India, the Thai Rice Exporters Association said Nov. 11. The country may release part of its 5.9 million ton reserve for export, Vichak Visetnoi, director general of the Foreign Trade Department, said in Bangkok.
Exporters in Vietnam, the second-biggest supplier, have shipped 5 million tons in the first nine months, according to government figures.
Record Exports
Thai production in the crop year that began Oct. 1 may increase to 35 million tons, from an estimated 32 million tons in the 2008-2009 year, according to the association. Exports reached a record 10.14 million tons in 2004.
Rice futures traded in Chicago have jumped 36 percent from this year’s low of $11.195 per 100 pounds on March 16. The price surged to a record $25.07 in April 2008 as concern that there would be a supply shortage prompted India and Vietnam to cut exports.
India’s state-owned trading firms, PEC Ltd., MMTC Ltd. and State Trading Corp., on Oct. 30 sought to import 10,000 tons each for delivery during November and December.
PEC has scrapped the tender, a government official said yesterday, while MMTC Chairman Sanjeev Batra said on Nov. 11 that the company won’t buy at “high prices.”
Louis Dreyfus Corp. and Emmsons International Ltd. were among eight companies which offered to sell to PEC at prices ranging from $366.88 a ton to $586.88 a ton. State Trading received offers at $442 to $598.75 a ton.
Subsidy
PEC and State Trading have told Emmsons that they are seeking a subsidy from the government before finalizing the purchase, Rakesh Singh, a trader at Emmsons, said in a phone interview. The government may have to pay $250 a ton to cover losses for selling imported rice at local rates, he said.
“They cannot sell in the local market if there’s no subsidy,” Singh said. Emmsons offered to sell rice from Pakistan, Vietnam or Thailand at $527.51 a ton, he said.
PEC and State Trading have asked the food ministry to extend the validity of the tenders from Nov. 12 to Nov. 23, to allow them to finalize the subsidy payment, Singh said.
Suppliers to Emmsons may not agree to sell at prices first offered in the tender if the period is extended, he said. “The second tender from the Philippines has already firmed up prices,” he said.
Separately, the government studying demands to restrict cotton exports amid a rise in domestic prices, Sharma said.
“Companies have made representations, the textiles minister has put in a word,” he said.
Cotton exports from India, the second-biggest grower, may top 7 million bales of 170 kilograms each, compared with 3.3 million bales a year earlier, A.B. Joshi, the country’s textiles commissioner, said in an interview on Nov. 11.
Source : bloomberg.com