Indian broken rice prices stable amid export curb concerns

The Indian market has been rocked in recent days by reports that the country's government is considering a broken rice export ban – or other curb – to ensure domestic supplies.

While there is no official decision from the government on a potential restriction, the market -- which accounts for 40% of the global rice trade -- was gloomy on the prospect.

One seller, who had withdrawn their broken rice offer, said that the product "will be banned," while a second exporter said of export curbs that "there will be something" and a third remarked that "exact details are unknown at the moment."

The anticipated action comes as the government grapples with uneven monsoon rainfall delaying planting of the main season kharif crop. As of Aug. 26, planted area in the country totaled 36.8 million hectares, down 6% on the year and 7.4% below average, according to data from the Ministry of Agriculture & Farmers Welfare.

Although broken rice is a byproduct of the milling process, domestic stocks have come increasingly under the spotlight as a result of reduced global feed supplies due to the Russia-Ukraine conflict. The war has artificially curbed feed supplies, redirecting a lot of demand to broken rice. Major feed buyers including China and Vietnam have subsequently bought significant volumes of Indian broken rice, while demand from the domestic feed industry has also increased.

China is not a traditional buyer of Indian rice, but has transformed into a dominant buyer in 2022. For example, China was the largest export market for non-Basmati rice in June at 314,485 mt, according to customs data, far ahead of the more traditional Indian broken rice buyer, Senegal, at 196,014 mt. A Singapore-based trader cited this Chinese demand as a major reason for the anticipated exports curb: "India won't let China have cheaper brokens."

One exporter said that "there is a lot of confusion, but there is no panic buying." This was echoed from a second seller who said that buyers were on the sidelines due to the ban, limiting export interest and any move up in local prices.

A Europe-based trader buying for West Africa confirmed that "nobody wants to buy" and that – if anything – the market was turning bearish. The lack of strength in the market, despite the expectations, is reflected in the Platts assessment of Indian 100% broken white rice Aug. 30, which was unchanged on the day at $325/mt FOB, S&P Global Commodity Insights data showed.

While the market is stable for now, trading participants are increasingly accepting that export curbs for the world's largest rice export market are on the horizon. "It can happen and it will happen," said the Europe-based trader.

In the meantime, the Indian government must balance its need to ensure domestic supplies, while not causing panic in the international rice market.