Rice price set to climb further after India bans export

There is increasing fear of further rise in global food prices after India banned non-basmati white rice exports to curb domestic inflation shortly after Russia terminated a key grain deal.

The Indian government said the ban, introduced on Thursday (20), would “ensure adequate availability of non-basmati white rice in the Indian market” and lead to lowering of prices for domestic consumers.

The immediate ban by India, which is introduced after heavy rains that hit domestic crops, follows the failure of a 20 per cent duty on international exports introduced in September to curb foreign demand, which has soared after extreme climate conditions hit production in countries.

India is the world’s largest rice exporter, accounting for more than 40 per cent of global shipments. While the ban does not apply to higher-grade basmati rice, non-basmati white rice accounts for about 25 per cent of exports. India’s move sent the price of rice from several Asian countries higher on global markets, while traders said they expected prices to rise substantially in the coming days.

Meanwhile, Russia pulled out of UN-brokered Black Sea grain deal, last week under which it guaranteed safe passage for vessels carrying cereals by sea with ships bypassing a Russian blockade of the country’s Black Sea ports and navigating safe passage through the waterway to Turkey’s Bosphorus Strait in order to reach global markets. Under the UN-brokered deal, grain prices had fallen by more than a third (35 per cent).

It was reported Russia bombed the Odesa port today (20), destroying grain loading infrastructure and about 60,000 tonnes of grain stored at the port. The immediate effect of the suspension is that millions of tonnes of wheat that was bound for Africa and West Asia has been stranded.

The recent move by Russia has once again raised fears over global food supplies. Ukraine accounts for 10 per cent of the world wheat market, 15 per cent of the corn market, and 13 per cent of the barley market. It is also a key global player in the market of sunflower oil. Global wheat prices jumped more than 10 per cent this week, their biggest weekly gain in more than 16 months as Russian attacks on Ukrainian ports raised worries over global supply.