India Lifts Rice Export Ban, $490 Floor Price Shocks Global Market, Vietnam Rice Market May Be Hit Hard!

According to information released by the Vietnamese Commerce Department in India, the Indian government has officially lifted the export ban on non-Basmati rice at the end of September and set a floor export price of $490 per ton. The move is expected to have a ripple effect on the global rice market, especially on Vietnam's rice export market.

Back on July 20, 2023, India's Directorate General of Foreign Trade announced the suspension of all exports of ordinary fragrant rice due to concerns over domestic rice supply shortages and rising food prices. According to statistics from the Vietnam Food Association (VFA), the current export price of 5% broken rice in Vietnam has climbed to $557 / ton, higher than similar products in Thailand and Pakistan. As India lifted the ban, it quickly resumed exports of 5% broken rice at a price of $491 / ton, helped by significant improvements in domestic rice stocks and supplies.

The VFA further noted that as of September 23, 2024, India's Heilif rice planting area in 2023-2024 (June-September) has reached 41.35 million hectares, an increase of about 2.97 per cent over the same period last year. Overall, the area under cultivation of Heiliff crops in the year reached 11.046 million hectares, an increase of 0.8 percent year-on-year. The government expects total milled rice production to reach a new high of 137.83 million tonnes in the current year (July 2023 to June 2024), up about 2% from the previous year.

Given that India is the world's leading exporter of rice, accounting for more than 40% of the world's total exports, the adjustment of its export policy will undoubtedly have a profound impact on the global market. In particular, when India imposed a ban on non-Basmati rice exports in July last year, global rice prices rose, forcing importers to turn to countries such as Vietnam and Thailand for alternative supplies. The move pushed up the price of Vietnamese rice but did not have a fundamental impact on its export market.

Fan Taiping, chairman of Zhongan High-tech Agriculture Co, said that while India's lifting of the rice export ban may trigger market volatility, Vietnam has effectively withstood external shocks with its stable crop production and food security policies. He pointed out that the rice export structure and market segments of India and Vietnam are different, so the re-export of ordinary fragrant rice from India is unlikely to have a direct impact on Vietnam's main export market.

Statistics show that in the first nine months of 2024, Vietnam's rice exports have reached about 7 million tons, with exports exceeding $4.3 billion, and annual exports are expected to break the $5 billion mark. Export companies are generally confident of achieving this goal, as Vietnam's rice export parameters have remained stable.

Nguyen Junke, deputy general manager of Long An Province No. 2 Phuc Seng Co., LTD., revealed that the current rice harvest in the Jiulong River Delta region has been successfully completed, and the sowing work for the autumn and winter seasons is proceeding in an orderly manner. As a result, the lifting of India's rice export ban has not had a significant impact on local rice purchase prices. For export enterprises, they have signed a number of fixed price contracts with customers to ensure price stability. At the same time, the demand for rice imports from traditional markets such as the Philippines and Indonesia remains strong, providing strong support for Vietnam's rice exports.

Vietnamese rice is known for its high quality, good taste and reasonable price in the international market, especially in the Metro Manila area and the southern provinces of the Philippines. In addition, as the second largest export market for Vietnamese rice, Indonesia's government has decided to import a large amount of rice in response to the drought and production reduction caused by the El Nino phenomenon, which will further boost Vietnam's export growth to the country.

It is worth noting that Vietnam's high-quality rice, fragrant rice and specialty rice varieties such as Jasmine, ST24 and ST25 enjoy a high reputation in the international market, earning Vietnamese rice a unique position on the international stage. In terms of price competition, Vietnamese rice does not directly compete with Indian or Thai rice, but wins market share with its unique quality advantage.

In terms of domestic rice supply, Vietnam's current supply situation remains stable, able to meet domestic consumption demand and secure export supplies. According to the planting bureau, by the end of September 2024, a total of 1.362 million hectares of rice had been harvested in the Jiulong River Delta region in summer and autumn, with a yield of nearly 6 tons/hectare and a total output of more than 8.1 million tons. At the same time, the sowing of autumn and winter crops has been basically completed, and some crops have begun to be harvested.

However, faced with the challenges of rapid changes in the global rice market and the impact of policy adjustments in major exporting countries such as India, businesses in Vietnam need to remain highly vigilant and keep up to date with market information. With a comprehensive understanding of market dynamics and flexibility in adjusting rice procurement and export strategies, Vietnam can ensure that the interests of rice farmers and export enterprises are balanced and contribute positively to achieving the national rice export target.