India rice prices gain as Bangladesh traders lap up new crop

By Arpan Varghese

BENGALURU (Reuters) - Rice prices rose this week in top exporter India on robust demand from neighbouring Bangladesh and gains in the rupee, while traders in Thailand pinned their hopes on possible deals with drought-hit Sri Lanka.

India's 5 percent broken parboiled rice prices rose by 3 per tonne to $421-$424 per tonne this week.

"Bangladeshi traders are aggressively buying new crop in eastern India. That is giving support to prices as African demand is weak," said a dealer based in Pune in the western state of Maharashtra.

Farmers in India cultivated winter-sown rice on 1.63 million hectares by December-end, 41 percent higher than a year ago. The country's non basmati rice exports rose 35 percent in April-November from the corresponding period in the previous year, to 5.57 million tonnes.

The appreciating rupee is also forcing exporters to raise prices to keep their margin intact, said an exporter in Kakinada in the southern Indian state of Andhra Pradesh.

The Indian rupee was trading near its highest level in about 30 months, slashing exporters returns from overseas sales.

Bangladesh, which emerged as a major rice importer in 2017 after floods damaged its crops, imported 2.3 million tonnes in the July-December period, food ministry data showed.

Despite hefty imports, domestic prices have not budged, with officials and traders expecting more imports of the staple grain in the coming months.

In August 2017, Bangladesh cut a duty on imports of the grain for the second time in two months, prompting purchases by private dealers, with most of the deals being struck with India.

Meanwhile, Thailand's benchmark 5 percent broken rice was quoted at $393-$396, free-on-board (FOB) Bangkok, from $398-$400 last week, with traders attributing the price changes to currency fluctuations.

The Ministry of Commerce revealed that in 2017, in the Jan 1-Dec 26 period, Thailand exported 11.25 million tonnes of rice, a 14.77 percent increase from the previous year and a record high.

Traders said it was too soon to ascertain how strong exports of Thai rice would be this year as last year's increase in exports was due to stockpiles the government was offloading into the market.

"I doubt 2018 figures will be as impressive because government stockpiles are running low now," said a Bangkok-based trader.

On potential deals this year, some traders were optimistic about exporting to Sri Lanka as droughts and floods caused a drop in production of the crop in the country..

"Perhaps there is an opportunity for Thai rice to be exported to Sri Lanka," said a Bangkok-based trader.

Meanwhile, Vietnam's rice market remained quiet amid thin trading, with the benchmark 5 percent broken rice extending its flat trend at $390-$395 a tonne, free-on-board (FOB) Saigon.

Exporters did some trading with buyers in the Philippines at this price range, a trader based in Ho Chi Minh city said.

(Reporting by Mi Nguyen in Hanoi, Suphanida Thakral in Bangkok, Rajendra Jadhav in Mumbai and Ruma Paul in Dhaka; Editing by Elaine Hardcastle)