India may ease rice curbs; supply worries linger

By Raju Gopalakrishnan

MANILA (Reuters) - India said on Friday it may allow limited rice exports, a sign that a global supply crisis could start to ease, as Philippine traders held off purchases hoping for new crops soon from southeast Asia.

Despite that optimism, U.S. rice prices surged almost 5 percent as prospects of reduced output in cyclone-devastated Myanmar and a larger-than-expected purchase of rice by Malaysia raised fresh supply concerns.

India, the world's second-biggest rice exporter last year, banned shipments of all rice except the basmati variety in March, one of a series of protectionist measures worldwide that triggered a wave of panic buying.

"We are reviewing the situation and may allow limited exports," Commerce Secretary Gopal Pillai said on the sidelines of a conference in the southern city of Kochi, adding the government may also review an export tax on basmati rice.

Prices on the Chicago Board of Trade however remained stubbornly high.

"Supply worries have intensified with the Myanmar cyclone and the market is likely to continue to rise and probably test its record highs soon," said a trader in Seoul, as U.S. rice futures for July delivery rose 4.9 percent to $23.495 per hundredweight.

Rice prices had eased slightly after hitting a record of $25.07 on April 24 on prospects of increased supply from Thailand, the world's largest rice exporter.

But trade sources said the cyclone that devastated Myanmar's Irrawaddy delta last weekend destroyed thousands of tonnes of rice that were in storage and thousands of acres in the agriculturally rich region were now not plantable.