KUALA LUMPUR (July 10): India's easing of rice export restrictions would cool prices globally, and the Philippines would be Asia's biggest winner from the move though Malaysia will also benefit, said Nomura.
If implemented, global prices of rice would fall as India accounted for 35% of global rice exports before the restrictions were implemented in 2022, Nomura said in a note to clients. Asia will benefit too, since rice is a staple food in the region, especially in emerging Asian economies, it said.
The move would help the Philippines the most due to the high share of rice in its consumer price index basket, its dependence on rice imports and recent rice import tariff reductions, Nomura said.
Singapore and Hong Kong depend on imports for 100% of their rice consumption needs, and the ratio is also high in Malaysia with 41% of domestic rice consumption demand met via imports, the research house said.
Rice prices have surged as the 2023 export ban by India, the world’s largest rice supplier, stoked concerns over supply. Prices peaked in February at US$19.08 (RM89.82) per hundredweight (cwt), their highest level since September 2008, and was last trading at US$14.70 per cwt on the Chicago Board of Trade.
In Asia, Thai white rice 5% stabilised at US$603 per tonne at end-June, down from a peak of US$669 per tonne at end-January.
Drought concerns in Thailand, the world’s second-largest exporter of rice, have also added to production worries, as rice is one of the most water-intensive crops. Malaysia, where rice is also planted, has also grappled with a shortage of rice amid price spikes.
India’s government is considering allowing shipments of white rice with a fixed duty, according to Bloomberg, as opposed to the current ban on non-Basmati white rice exports. Further, India may also scrap the 20% export duty on parboiled rice and instead impose a fixed levy at US$100 per tonne.
“We believe such easing is likely to materialise, given expectations of a good harvest, ample rice buffer stocks and softening rice price inflation in India,” Nomura said.
The process, however, is expected to be “gradual” with better crop prospects likely to cool local rice prices, “in turn leading authorities to further ease restrictions, which should have favourable spillovers on global rice prices over time”, Nomura said.