Pakistani rice exporters are hopeful about a new 5% white rice purchase tender from Bangladesh, driven by Bangladesh's recent interest in sourcing WR from Pakistan.
This development has the potential to revitalize demand for Pakistani rice and reestablish long-dormant trade relations between the two countries, sources told S&P Global Commodity Insights.
In recent discussions, Pakistani-based exporters provided insights into the current market dynamics between Pakistan and Bangladesh regarding rice exports.
A Karachi-based exporter said, "Exporters are trying very hard to start work on Bangladesh tender for parboiled rice," but nearly most exporters expressed concerns that the cost of production in Pakistan may be too high due to overhead costs. He suggested that geopolitical factors might lead Bangladesh to consider higher prices for parboiled rice from Pakistan, like how they previously viewed higher prices from Vietnam for an earlier purchase.
The Trading Corporation of Pakistan, or TCP, issued a new tender, which is the second tender released by Bangladesh for purchasing rice from Pakistan in the marketing year 2024-25, on Feb. 20 for the procurement of 50,000 mt of non-basmati parboiled 5% rice, intended for shipment to Bangladesh.
While most exporters felt it was difficult to work on such a volume for Parboiled rice from Pakistan, few expressed confidence that the trade volume was achievable and that Pakistan could meet the required quantity with sufficient effort.
Platts assessed Pakistani Parboiled 5% WR at $404/mt FOB March 4, down by $21/mt month over month, and showing a drop of $207/mt on the year, amid an overall bearish trend prevailing in the market following India's re-entry into the rice trade.
Market participants also mentioned the importance of recent trades with Bangladesh, with one exporter noting, "The first trade in good volume was recently completed with Bangladesh since 1971, amounting to approximately 7 billion rupees for 50,000 tons of rice." This deal is seen as a positive development for both countries, marking a significant milestone in their trade relations. Specifically, it involves Bangladesh purchasing 50,000 mt of 5% WR from Pakistan, scheduled for delivery in two parts, with the final 50% expected to arrive at the destination by March.
The market also emphasized Bangladesh's critical need for rice, wheat, and sugar and suggested that if Pakistan can secure a share of this market, it would benefit the Pakistani rice export sector.
However, he cautioned that "it is necessary for Pakistani politicians to take a serious interest in expanding trade with Bangladesh," indicating that political will is essential for fostering these trade relationships.
As the final decision on the latest tender for Parboiled rice is still pending, market participants are keenly anticipating another tender for 5% WR from Bangladesh. Few market participants mentioned that exporters have been actively lobbying the TCP to persuade Bangladesh to source WR from Pakistan. However, no firm developments have been reported regarding this initiative yet.
According to USDA forecasts, rice imports to Bangladesh are projected to rise dramatically from 25,000 mt in the MY 2023-24 (May-April) to 900,000 mt in the MY 2024-25. This increase is attributed to the government of Bangladesh's decision to reduce import tariffs in response to the flooding in the country, which has significantly affected rice production in the country.
