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Why India holds the key to global rice market outlook

NEW DELHI/MUMBAI: India's surprise decision to ban wheat exports has raised concerns about potential curbs on rice exports as well, prompting rice traders to step up purchases and place atypical orders for longer-dated deliveries.

Government and trade officials have said India, the world's biggest exporter of rice, does not plan to curb shipments for now, as local prices remain low and state warehouses hold ample supplies.

That's a relief for import-dependent countries already grappling with surging food costs, but most of the country's rice growing season lies ahead and any change in prospects for the harvest could alter its stance on exports of the staple grain.

Monsoon rains determine the size of the rice crop, and plentiful rains this year would help it maintain its preeminent position in the global rice trade.

Patchy monsoon rains, however, would stunt the crop and cut yields and that might lead to a drawdown in state inventories that would trigger export curbs to ensure sufficient supplies for the country's 1.4 billion people.

Why is India so crucial for global rice supplies?

India's rice exports touched a record 21.5 million tonnes in 2021, more than the combined shipments of the world's next four biggest exporters of the grain: Thailand, Vietnam, Pakistan and the United States.

India, the world's biggest rice consumer after China, has a market share of more than 40% of the global rice trade.

High domestic stocks and low local prices allowed India to offer rice at deep discounts over the past two years, helping poorer nations, many in Asia and Africa, grapple with soaring wheat prices.

India exports rice to more than 150 countries, and any reduction in its shipments would fuel food inflation. The grain is a staple for more than 3 billion people, and when India banned exports in 2007, global prices shot to new peaks.

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