India's August rice exports drop 29% on weak African demand

By Rajendra Jadhav

MUMBAI (Reuters) - India's rice exports in August fell 29% year-on-year to 644,249 tonnes, government data showed on Thursday, due to weak demand from African countries for non-basmati rice, among other factors.

"Demand from west African countries is weak for non-basmati rice. They have bought a lot from China and don't need to buy huge volumes now," said Nitin Gupta, vice president of Olam India's rice business.

India is the world's biggest rice exporter but its shipments have plunged 27% in the first five months of the 2019/20 financial year, starting on April 1, to 3.8 million tonnes, the data showed.

Iran, the biggest buyer of India's basmati rice, has nearly stopped purchases in the last few weeks as it harvests its own crop, said an exporter based in New Delhi, who declined to be identified.

"Iran could resume buying early next year after harvesting the local crop," the exporter said.

Rice supplies from India's summer-sown crop are expected to improve from next month and this could moderate local prices and make exports competitive, Gupta said.

Last month, the government had said that rice production from the summer-sown crop in 2019 was expected to drop 1.7% from a year ago to 100.35 million tonnes.

Non-basmati rice exports could fall 40% in 2019/20 from a year ago unless the government provided some incentive for exports, said B V Krishna Rao, president of the Rice Exporters Association (REA).

"The industry badly needs government support to accelerate exports," Rao said.

India exported 11.95 million tonnes of rice in 2018/19 through March 31, down 7.2% from the previous 12 months, even though it had provided incentives for exports of non-basmati rice for four months of the year.

Lower prices from competitors could also be a contributing factor to a fall in exports.

India's 5% broken white rice was quoted at about $368-$372 per tonne this week compared with $350 for supplies from Vietnam.

Smaller shipments from India could help rivals such as Thailand, Vietnam and Myanmar raise their exports, according to Indian exporters.

It could also force Prime Minister Narendra Modi's government to buy more from farmers, even as it struggles to liquidate last year's stocks.

India mainly exports non-basmati rice to Bangladesh, Nepal, Benin and Senegal, and premier basmati rice to Iran, Saudi Arabia and Iraq.

(Reporting by Rajendra Jadhav; Editing by Karishma Singh, Robert Birsel)