2023-07-21 05:56:51 ET
Traders are already watching wheat costs following Russia's exit from the Black Sea grain deal , but now, rice prices are in focus. India has banned exports of non-basmati white rice, effective immediately, to ensure adequate availability in the country and rein in soaring domestic prices.
The world's biggest rice exporter has seen retail prices for rice increase 11.5% Y/Y and 3% M/M, according to a statement from India's Ministry of Consumer Affairs. India accounts for more than 40% of global rice exports.
Exports will be allowed on the basis of permission granted by the Indian government to other countries to meet their food security needs and based on their governments' requests.
India's export ban is expected to push food inflation even higher. "It's fair to say this will have quite an impact on global food prices," said Emma Wall, head of investment analysis and research, Hargreaves Lansdown.
The ban comes a day after India raised the price at which it will buy new-season common rice paddy from farmers by 7%. Last year, India imposed a 20% tax on exports of various grades of rice and banned exports of broken rice.
While the latest ban may ease domestic prices, international rates are expected to scale higher, as the onset of the El Niño weather pattern threatens to tighten supplies.
"Rice prices are the highest in more than two years, per futures prices on the Chicago Board of Trade, a result of importer stockpiling as El Niño-related supply concerns intensify in Thailand and Vietnam," said Charles Schwab's Jeffrey Kleintop
Rice futures ( RR1:COM ) are nearing $16 per hundredweight count in July, the highest level since May-end.
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India sparks food inflation fears with latest rice export ban