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Why India holds the key to global rice market outlook

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India’s surprise decision to ban wheat exports has raised concerns about potential curbs on rice exports as well, prompting rice traders to step up purchases and place atypical orders for longer-dated deliveries. Government and trade officials have said India, the world’s biggest exporter of rice, does not plan to curb shipments for now, as local prices remain low and state warehouses hold ample supplies.

That’s a relief for import-dependent countries already grappling with surging food costs, but most of India’s rice growing season lies ahead and any change in prospects for the harvest could alter its stance on exports of the staple grain. Monsoon rains determine the size of India’s rice crop, and plentiful rains this year would help it maintain its preeminent position in the global rice trade. Patchy monsoon rains, however, would stunt the crop and cut yields and that might lead to a drawdown in state inventories that would trigger export curbs to ensure sufficient supplies for the country’s 1.4 billion people.

 

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