Domestic paddy prices hold firm over damage to crop last year

Amid the setback faced by the Indian basmati exporters over stalled shipments due to the ongoing US-Iran standoff, the prices of non-basmati paddy are holding firm and rising in some local markets after reports of crop damage following last year’s heavy rainfall and subsequent flooding in major growing areas have surfaced.

After the advisory by All India Rice Exporters Association (AIREA) to suspend basmati shipments to Iran for the time being, the prospects of basmati trade had come under the cloud which reflected in the fall in its prices on the Indian Commodity Exchange (ICEX).

Iran is the largest buyer of Indian basmati and shipments had stood at nearly $1.5 billion in 2018-19.

However, non-basmati paddy (grade III) was trading at Rs 2,440 per quintal today, up 5.62 per cent compared to Rs 2,310 per quintal a month back on December 9, 2019, at the Choubepur mandi. Similarly, the paddy was trading at Rs 2,350 per quintal at the Kanpur grain market today vis-à-vis Rs 2,150 per quintal on December 9, 2019, thus up 9.30 per cent over the past month.

Other markets have also reflected similar trends indicating that the prospects of crop damage to paddy have supported the domestic prices of the non-basmati variety.

Mumbai-based rice trader and exporter Devendra Vora told Business Standard that the domestic paddy prices had already bottomed out and were expected to rise further from these levels.

Source: Agmark Compiled by BS Research Bureau

According to National Rice Research Institute (NRRI) principal scientist Dr Biswajit Mondal, parts of India had witnessed abnormal rainfall during Kharif season 2019-20 and consequently, the rice production was expected at 90 million tonnes (MT), 12 per cent down from last year’s production estimate of 102 MT.

Besides, heavy flooding due to consistent rains during November 2019 resulted into extensive damage to the Kharif cropped area, including paddy, in 15 States, including major rice-producing states of Maharashtra, Karnataka, Punjab, Madhya Pradesh, Uttar Pradesh etc.

Meanwhile, there were also reports of the recent spells of untimely rainfall in some states, including the coastal areas of Odisha impacting paddy procurement in the ongoing Kharif marketing season (KMS) 2019-20.

The local reports had claimed custom millers in a few Odisha districts were not lifting the harvested paddy from the ‘mandis’ citing lack of properly covered storage capacity due to rainfall. In the current season, Odisha is targetting paddy procurement of 6 MT, of which only 1.2 MT could be procured till January 1, 2020, compared to more than 10 MT and 2.7 MT in Punjab and Uttar Pradesh respectively.

However, a senior Food Corporation of India (FCI) official said the bulk of paddy had been procured, especially in the Northern states, and that there were no reports of the fresh rainfall affecting the process in the remaining states, including Odisha, where procurement is primarily conducted by the state government agencies.

Meanwhile, according to trade analyst Ajay Kedia, the basmati paddy prices have also risen by 2 per cent following reconciliatory tone on the Gulf crisis by the US president, Donald Trump, yesterday.