India May Import 2M Tons Of Rice Over Next 12 Mos

India may import a total of two million metric tons of rice over the next 12 months in phases to meet a possible shortfall after a drought. The imports will start only if a senior group of ministers approves the proposal, put forth by the food ministry, at a meeting scheduled Nov. 12, according to a food ministry document seen by Dow Jones Newswires Tuesday.

Three state-run companies—State Trading Corp. (512531.BY), MMTC Ltd. (513377.BY), and PEC Ltd.—issued import tenders for 10,000 tons each over Friday and Saturday, but it wasn’t immediately clear whether these were over and above the planned two million tons of imports.

India, the world’s second largest rice producer, is mainly looking at Vietnam, Thailand and Cambodia for the imports. Thailand may export more than its previous record of 10 million tons of rice in
2010 aided by large stockpiles of around seven million tons in the government granaries.

India’s imports will be nominated by the federal trade ministry.
It’s looking to import rice at $450-$560/ton for the local market, which may trigger a rally in global prices.

“The global market has already been gearing itself for imports by India and the Philippines,” said S. Raghuraman, head of research at Agriwatch, a commodities research firm.

The Philippines, the world’s largest rice importer, is expected to import much larger amounts in the coming year due to recent typhoon damage. The CBOT November rice contract has climbed $1.27 1/2 in the past five days, and prices are at their highest point since early January. Raghuraman said that for now India is not facing any shortfall and the pace of procurement from farmers is also picking up.

State-run Food Corporation of India’s rice purchases from farmers in the Oct. 1-Nov. 2 period rose 5.2% from a year earlier to 9.18 million tons. But even if India starts buying a minimal quantity from the global markets, prices could spike by 20%, before easing a bit, Raghuraman added.

India may also look to import another one million tons of rice, over and above the present plan of two million tons, after assessing federal stocks in March and July 2010. Late October, India scrapped an import tax of 70% on certain varieties of rice to boost supplies after a drought reduced the output of the summer-sown staple grain.
India’s rice stocks as of Oct. 1, 2009 totaled 15.35 million tons, compared with the government’s buffer and strategic reserve norm of 7.2 million tons. The quantities imported will be sold in the open market.

“Depending on trends in rice procurement (for the government’s stocks) and demand for rice from the central pool (federal stocks), the government may direct Food Corp of India (the nodal agency for foodgrain procurement) to take over the imported stocks for the central pool,” said the document.

India’s rice purchases for welfare programs in the 2008-09 marketing year ended September totaled 33.3 million tons. The government’s rice purchases in the 2009-10 marketing year are likely to decline to around 26 million tons due to a smaller crop that was first hit by scant
rainfall and later by floods.

India harvested a record 99.15 million tons of rice in the fiscal year ended March 2009.

Source: CME Group