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Ind-Ra: India to Achieve Record Rice Production in Crop Year 2017-2018
(15:37, 13 Jun 2018)
According to the third advance estimate for 2017-2018, India is set to achieve a record rice production of 111.5 million tonnes (2016-2017: 109.7 million tonnes) against the target of 108.5 million tonnes. While the kharif output is estimated to be at similar levels as 2016-2017, the rabi output is estimated to increase around 13% y-o-y.

The total stock in the central pool hit a 5-year high of 25.3 million tonnes on 1 May 2018, up 11% yoy and 2% mom. India Met Department has forecast the maximum probability of a normal monsoon at 97% (+/- 5%) of long period average for 2018.

India Ratings and Research (Ind-Ra) believes India's export price is likely to remain competitive in the international market and the recent decline in India's rice export prices could attract buying from African countries, as Indian rice has become more competitive while a decline in rupee is cushioning exporters' margins. Indian rice prices softened as rice exports from India declined in April 2018, due to a decline in the exports of basmati rice to Saudi Arabia and non-basmati rice to Bangladesh along with a subdued demand from African countries. Ind-Ra believes imports by Bangladesh are likely to reduce in 2018-2019, as its domestic output rebounds due to a crop recovery and expansion in area sown because of high prices in 2017. As a result, India's exports could reduce by 0.5 million tonnes to 1 million tonnes.

Vietnam's export prices are likely to remain strong in the near-term, on the back of a strong demand from Indonesia and Philippines. While Thai rice prices could witness a marginal increase in the near-term due to the country's export contract with Philippines, supply is likely to shoot up from the harvest around end-May or June.

Average monthly domestic wholesale price of rice marginally recovered to around 1.5% mom (negative 1% yoy) to around INR2,940/quintal in May 2018 after declining 5% mom in April 2018, due to heavy arrivals of rice and an adequate stock position. Basmati prices also recovered in May 2018, due to an increase in demand from rice mills and a fall in arrivals from producing areas.

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