Indian parboiled rice prices hit 18-month low amid oversupply in west African markets

Indian PB 5% rice prices slumped to an 18-month low Jan. 31 as overseas demand weakened due to oversupply in the West African markets, S&P Global Commodity Insights data showed.

Platts, part of Commodity Insights, assessed Indian PB 5% at $429/mt FOB Jan. 31, down $10/mt month over month and lower by $9/mt since July 14, 2023, when it was at $438/mt FOB.

Meanwhile, Platts assessed Parboiled 5% STX at $496/mt CFR Cotonou on Jan. 30, down $18/mt month on month and $13/mt lower than Nov. 23, 2023, when Platts started the assessment.

Fall in prices are likely boost exports and make Indian rice competitive, according to sources.

Oversupply in West African market

Importers from Ivory Coast and Togo expressed concerns about oversupply in the market, anticipating demand to rebound in the local market only close to March due to the Easter and Ramadan.

Market participants largely attributed the oversupply to significant exports from India, with many cargoes ordered when Indian rice prices were low.

There are 9 bulk ships standing for loading at Kakinada port, expected to sail in January 2025 carrying PB 5% rice to markets such as Benin, Cameroon and Togo and about 16 ships already sailed from Kakinada port in December 2024, according to sources.

A Cotonou-based importer said the market is oversupplied, causing considerable congestion at the port with many ships.

Mirroring similar sentiments, a buyer in Abidjan mentioned, "There are offers entering the market, but at the moment, no one is making purchases; buyers are currently in a holding period." A buyer in Togo added, "There are numerous vessels arriving, many from India; it feels like rice is everywhere, yet there are no buyers because everyone is concerned that prices will drop further."

Higher supply in Indian market

As of Jan. 1, India has 29 million mt of milled rice in the central pool, more than the buffer norm as of January of 7.6 million mt, according to Food Corporation of India.

On Jan. 17, India allocated 2.4 million mt of rice to sell from the central pool for ethanol production under the OMSS policy at Rupees 22,500/mt ($260/mt), while private and cooperatives will continue to buy at Rupees 28,000/mt ($323.30/mt) through the Open Market Sale Scheme.

Indian 5% broken white rice prices slumped to a near two-year low Jan. 20, as the government's 2.4 million-mt allocation of rice for ethanol production under the Open Market Sale Scheme (Domestic) policy has intensified the downward pressure on the country's white rice market, Commodity Insights data showed.

Additionally, sources cited that falling WR prices have further pressured PB 5% prices.

With tepid international demand and a surge of supply in the market, Indian exporters lowered their offers by $10/mt week on week for PB 5% as local prices declined.

Local milled rice prices have come down to Rupees 35,000/mt ($404/mt) from Rupees 36,000/mt ($415.7/mt ) in two weeks, millers added, indicating bearish sentiments in the local market.

Platts heard bids at $420/mt FOB on Jan. 31, falling $5-$10/mt week on week since Jan. 15, indicating a decline in buying interest.

A trader said that "Even at these [current] levels I am concerned, West African markets keep dropping."

On higher supply, India is forecast to export 21.5 million mt of rice in the marketing year 2024-25 (October-September), up 49.3% year over year, according to Commodity Insights data.