The rice parable

Since September 2011, international rice prices have generally been exhibiting an easing trend. However the prices of Pakistani varieties have stayed firm of late. With prices remaining favourably consistent due to increased demand from the Middle East and East Africa at the tail of the season, the market has experienced a propitious trend with Pakistani exporters handling last-minute orders before the start of Ramazan. According to the FAO Rice Price Index, the prices for rice have been strengthening, the world over since the beginning of May, with the FAO Food Price Index gaining 3 points over the last month. Most of these price increments have been reflecting an accession of export demand ahead of the waning rice season. Moreover, rice prices have also shown predominantly positive price variations in other countries, especially for the Indica and Fragrant rice varieties. A birds eye view at the situation of the prices in the rice commodity market, however, shows a primarily ebbing trend, with the prices beginning a downward slope in September 2011, when India lifted its three-year ban on rice exports, and re-entered the international rice arena. This has led to escalated price competitiveness among exporters, with world prices sloughing 10 percent off their September values. Similarly, the prices of Pakistani rice varieties have also been bearing the brunt of Indias capture of a massive portion of exports of non-basmati rice, which is being exacerbated by the ever depreciating Pakistani rupee. However, Pakistans market has been sustained over the last three months by continued interest from Kuwait and Kenya, who have been placing orders eleventh-hour with Pakistani exporters due to port impasses in India ahead of the large sugar imports into the country. Added to this, there has also been a let-up of freight costs into the Mombasa port in Kenya, making imports an alluring prospect. Overall, despite the forecasts of Indias export going from strength-to-strength in the near future and the softening of prices for Pakistani exports, coming off the tail of the interest from the Middle East and Kenya, end-of-season exports from Pakistan are expected to go up to a promising 3.5 million tons, according to forecasts by USDA Foreign Agricultural Services, owing primarily to the 30 percent increase in the countrys production. Looking forward, the Government of Pakistan is aiming to increase international export by forming an alliance with BERNAS (Padiberas Nasional Bhd), the Malaysian agency responsible for buying the countrys paddy. Talks have been planned in this regard and there have already been two successful buying missions to Pakistan carried out by BERNAS following storms in Thailand. With the export of 148,000 tons of both basmati and non-basmati rice in the last year, the trends for rice exports to Malaysia have been on a consistent rise, and a potential deal between the two governments could act as a boon for Pakistans rice exporters.