CHANDIGARH: Basmati prices that have opened firm are set to go up further, traders said, as Indian exporters are facing a shortage of the premium long-grain rice in a season when top importer Iran has opened its market earlier than usual.
Basmati has regained its flavour for the trade and farmers this year, as prices opened 15-20% higher than last year due to lower carry-over stocks, the government’s decision to increase the support price for non-basmati rice and a weaker rupee that boosted returns in the local currency on this export-focused commodity.
Early opening of the Iranian market has come in as a boon for exporters in India and Pakistan. The Gulf nation usually observes a five-six-month ban on import of rice to safeguard the interest of its own growers. Tehran, which is facing US sanctions, opened the trade in December this time, compared with January in the previous season, following forecast of a lower domestic output of rice.
However, traders said there were delays in payments, causing liquidity issues for them.
Iran is releasing payments to exporters only after the bill of lading is submitted. “The situation is contrary to previous years when exporters were extended advance payments based on export history and export orders,” said Amit Miglani, managing director of rice exporter Lekh Raj Narender Kumar.
This is because Iran has overhauled its payment mechanism to check misuse of subsidy on food grains by domestic importers who wrongly claim benefit on goods other than basmati, sources in the trade said.
But the situation is expected to improve, driving exports and strengthening prices from the current range of $1,050-1,200 (Rs 74,550-85,200) per tonne, traders said.
“The global prices are set to keep the uptrend once payment issue of Iran is fixed, as exporters have limited stock and farmers have been paid Rs 500 per (quintal) higher for premium quality of rice,” Arvinder Pal Singh of Amar Singh Chawal said. Some exporters will have to default on their export commitments due to limited stock, he added.
Basmati tops the list of agricultural commodities exported from India. The country ships around 4 million tonnes of the premium rice annually to more than 120 countries including Iran, Saudi Arabia and Iraq. A quarter of its bought by Iran.
After initial hiccups over stringent residue rules that Saudi Arabia had adopted, exports have picked up to the second largest basmati buyer as well, as Riyad decided to withhold implementation of the regulations.
Source: economictimes.indiatimes.com