* End of floor price would spur sales of low grade basmati rice
* Move will help India cut its ballooning stocks
By Ratnajyoti Dutta
NEW DELHI, July 6 (Reuters) - India’s annual basmati exports may rise as much as 15 percent in 2012/13, touching a record 3 million tonnes, after New Delhi, grappling with unmanageable rice stocks, scrapped a floor price for overseas sales, industry officials said on Friday.
India, the world’s second biggest rice producer and top basmati seller, was offering the aromatic grain at above $700 per tonne, while no such floor existed for common variety.
New Delhi earlier this week scrapped the $700 base price for overseas sales of basmati rice.
Traders said ending the export price of basmati rice would help exporters sell even lower grades of basmati, which may fetch prices below $700 a tonne. India’s premium basmati rice is quoted at $1,055-$1,065 per tonne FoB.
“Removal of the MEP (minimum export price) is logical when there is no curb on non-basmati rice,” D.K. Gupta, an advisor at state-run export registration agency- Agricultural and Processed Food Products Export Development Authority (APEDA), told Reuters.
India produced a record 103 million tonnes of rice in 2011/12 crop year that ended in June, a jump of about 8 percent from the previous year, including 5.0 million tonnes of basmati.
In the last fiscal year that ended in March India exported 2.6 million tonnes, said Gupta, adding the decision to end floor price for exports would spur demand for the premium rice from markets in Saudi Arabia and Iraq, Europe and the United States.
India lifted a four year export ban on common rice, which competes with supplies from Thailand, in September as part of a strategy to cut surplus stocks.
With its bumper harvest in recent years and choc-a-block warehouses, India could emerge as the world’s second largest rice exporter behind Thailand in 2012, shipping around 7 million tonnes.
India’s rice stocks stood at 32.1 million tonnes on June 1 against the targeted 12.2 million tonnes.
“Basmati export will rise by 10 to 15 percent in 2012/13,” said R.S. Seshadri, director of Tilda Riceland, a leading New-Delhi-based basmati exporter.
Traders said the country has so far exported about 5 million tonnes of common rice since September, when the ban on non-basmati rice was lifted.
Indian common rice varieties are quoted around $375-$420 per tonne, making supplies from the south Asian country attractive compared to those from Thailand.
The benchmark 100 percent B grade Thai white rice RI-THWHB-P1 was steady at $600 per tonne for the fifth straight week on Wednesday. [ID: nL3E8I41LE] (Editing by Keiron Henderson)