India May Import Rice in 2010, Trigger Price Surge, Trader Says

By Luzi Ann Javier
Oct. 28 (Bloomberg) -- India, the world’s second-largest rice grower, may import up to 3 million metric tons next year as the government secures supplies in case the nation faces another year of drought, triggering a price surge, a trader said today.

The weakest monsoon in India since 1972 may slash rice output by about 18 percent to 81 million tons in the marketing year that began Oct. 1, below forecast demand of 89 million tons, according to the United Nations Food and Agriculture Organization.

“The government can afford to have rice sitting in the warehouse and rotting, but they can’t afford to have a very low stockpile of rice next year in case another drought or flooding hurts crops,” Rakesh Singh, head rice trader at Emmsons International Ltd., which supplies about 500,000 tons a year in India, said in an interview in Cebu, central Philippines. “We may hear about a tender in the next few weeks.”

If India imports rice next year, it will be the first time the country has purchased the grain since 2006, according to data from the U.S. Department of Agriculture, and only the second time since 2001.

The country’s return to the import market would push Thai rice export prices, the regional benchmark, at least 25 percent higher from current levels to $800 a ton, Singh said.

The price of 100 percent grade-B Thai white rice was set at $525 a ton last week, the fourth consecutive weekly drop, according to Thai Rice Exporters Association figures.

‘Wild Card’

Reduced production caused by bad weather in the Philippines and Latin America and lower output in the U.S. may help push prices back to record levels next year, Dwight Roberts, president of the U.S. Rice Producers Association said in an interview in Cebu yesterday. Declining Indian production may turn the South Asian nation into an importer, triggering a surge in global prices, he added.

“I think India is a real wild card in the next few months, or the next few weeks,” Roberts said.

Rice futures traded in Chicago surged to a record $25.07 per 100 pounds in April 2008 as shipments slowed and buyers including the Philippines, the world’s biggest importer, increased purchases to secure supplies and cool inflation. Rice for January delivery traded 1.1 percent higher at $13.915 per 100 pounds as of 3:25 p.m. Singapore.

Still, India has no plans to import rice because its reserves are adequate, Nanda Kumar, the country’s farm secretary, said in New Delhi yesterday.

To contact the reporter on this story: Luzi Ann Javier in Cebu at ljavier@bloomberg.net

Last Updated: October 28, 2009 04:00 EDT