NEW DELHI : India’s rice production for the 2023-24 season may fall to 128 million tonnes, according to a report from the Foreign Agricultural Service (FAS) of the US Department of Agriculture.
FAS New Delhi lowered its MY 2023/2024 rice production forecast to 128 MMT (108 MMT kharif rice and 20 MMT rabi/summer rice) based on field reports suggesting that the patchy 2023 monsoon (June-October) season adversely affected the kharif rice crop harvest, especially in eastern India.
Lower production numbers are also expected due to the El Niño bringing in drier/warmer weather conditions this winter, which will affect the rabi/summer rice crop’s prospects. Post field sources are also reporting lower yields in the flooding that impacted northern states of Punjab and Haryana.
Assuming no significant change in the export policy, despite the strong export price parity for Indian rice in the international market, MY 2023/2024 exports are estimated at 17.5 MMT, which includes 5 MMT basmati rice, 8-9 MMT parboiled rice and balance broken rice, and NBW rice allowed through special exemptions.
Post’s MY 2023/2024 forecast ending stocks have been lowered to 30.5 MMT, based on forecasted lower production and expected strong consumption.
MSP Procurement: The Indian government’s MSP rice procurement in MY 2022/2023 is estimated lower at 56.95 MMT, down from 57.6 MMT last year (and significantly lower from the record 60.8 MMT procured in MY 2020/2021). MY 2023/2024 MSP rice procurement through October 29, 2023, is estimated at 9.29 MMT compared to 10.2 MMT registered at the same time last year.
With early MSP rice procurement largely limited to the states of Punjab and Haryana, lower production yields are being blamed on July 2023’s devastating flooding in these states. Kharif MSP rice procurement is anticipated to quicken in the other rice production states in the coming weeks, peaking by November’s end.
Prices Firming Up: Domestic rice prices spiked to record levels in September, despite the Indian government imposing various export restrictive measures. Prices have eased in October with the arrival of the new crop but are stubbornly still over 10 percent above last year’s level.
Despite foreseen lower export offtake, due to the government’s policy restrictions, domestic prices are likely to remain steady on higher government MSP procurement for un-milled paddy rice and due to relatively tight domestic supplies compared to last year.4 Post anticipates that market prices are likely to ease as rice arrivals gain pace in the other Indian rice production states in November-December 2023. Future prices during the marketing year are likely to move in a narrow range as the Indian government will ensure sufficient supplies to contain prices through the release of additional government-held rice stocks, at least through the upcoming general elections in April-May 2024.
CONSUMPTION : MY 2022/2023 Consumption Revised Lower: FAS New Delhi is revising its MY 2022/2023 consumption figure lower to 108 MMT. The revision is premised on reduced harvest volume, higher ending stocks, and lower offtake of subsidized government-rice after the end of the additional 5-kilograms (kg) free food grain scheme in December 2022. Official monthly rice offtake figures estimate government rice offtake in MY 2022/2023 at 50.2 MMT compared to 60.8 MMT last year.
With average domestic prices of rice nearly nine percent over last year’s, MY 2022/2023 consumption is likely to shrink from last year’s level when the government had rolled out an additional 25-28 MMT of rice free-of-cost to more than 800 million people.
MY 2023/2024 Forecast Lowered Marginally: Despite relatively tight domestic supplies, the MY 2023/2024 consumption forecast is marginally revised to 115 MMT. With eyes on the upcoming general elections in April-May 2024, the Indian government will strive to ensure that there are sufficient supplies of rice, at reasonable prices available.
(By Commoditiescontrol Bureau)
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