Rice prices in India dip on rising supply; Thailand eyes Sri Lankan demand

By Koustav Samanta

BENGALURU (Reuters) - Rice prices in India slipped this week on expectations of a rise in supplies from the new season crop, while rates for the staple grain edged higher in Thailand as traders were optimistic about the possibility of demand from Sri Lanka.

Thailand's benchmark 5-percent broken rice was quoted at $375-$388 a tonne, free-on-board (FOB) Bangkok, up from $375-$385 last week.

"There looks to be demand from Sri Lanka, which we're optimistic will translate into more demand for Thai rice," said a Bangkok-based rice trader.

The government of Sri Lanka has issued a tender to buy 200,000 tonnes of rice as recent floods in the country have destroyed crops.

In Thailand, however, heavy rain have not hurt crops and all of the rice has already been harvested. But, the rains have caused difficulties for shipments to be collected and delivered, which has had a negative impact on exports, traders said.

"Due to heavy rains, a lot of ships from abroad coming in to get rice have had to push their schedule back. From November onwards when the rains subside, exports will hopefully be more active," said a Bangkok-based trader.

India's 5 percent broken parboiled rice prices edged down by $2 per tonne to $402 to $405 per tonne this week.

"New season supply will be available in the next few weeks. Exports will also pick up with supply," said B V Krishna Rao, managing director of leading exporter Pattabhi Agro Foods Pvt.

"Demand is expected to be robust from Sri Lanka and Bangladesh in the next few months," he added.

Bangladesh, which has emerged as a major importer this year after floods damaged its crops, has approved the purchase of 100,000 tonnes of parboiled rice from India in a government-to-government deal at $455 a tonne, including CIF and discharge costs.

It has also approved a purchase of 150,000 tonnes of parboiled rice from Thailand at $465 a tonne.

The country's major summer rice output in 2017 fell about 5 percent from a year earlier to 18 million tonnes, the lowest in seven years, according to a preliminary estimate of the Bangladesh Bureau of Statistics.

Meanwhile, in Vietnam, high prices prevailed as rice stocks were running dry, traders said. Benchmark 5-percent broken rice rates rose to $395-405 per tonne, FOB Saigon, from $390-400 last week.

"Supply is very low. We are running out of stock, so rice prices will stay high," a trader in Ho Chi Minh City said, adding trade was dull as Vietnam's prices are not appealing to foreign rice importers.

"I think prices will have to fall, otherwise no one would buy from us," another trader said.

Traders said new supply would not be available until the completion of minor autumn-winter crop harvest in November.

Rice growing areas in southern regions have shrunk due to flooding, but productivity is expected to rise 3.2 percent from a year earlier, an agriculture ministry report said on Thursday.

(Reporting by Mi Nguyen in Hanoi, Rajendra Jadhav in Mumbai, Ruma Paul in Dhaka and Suphanida Thakral in Bangkok; editing by David Evans)