September 5, 2019 / 1:40 PM / in 2 months

Rupee slide drags Indian rice prices lower, strong baht buoys Thai rates

BENGALURU (Reuters) - A plunging rupee weighed on Indian rice export prices this week while a strong baht kept rates for the grain from flood-hit Thailand near a one-year high and more expensive than its Asian competitors.

Men load rice bags to a ship for export at a rice processing factory in Vietnam's southern Mekong delta, Vietnam July 6, 2017. REUTERS/Kham/File Photo

In top-exporter India, the benchmark 5% broken parboiled variety was quoted around $369-$374 per tonne this week, down from $374-$378 a week ago, due to a depreciation of the rupee despite healthy demand from African countries.

“The rupee has been helping to clinch deals in last few weeks,” said an exporter based at Kakinada in the southern state of Andhra Pradesh.

The rupee fell to 72.40 per dollar on Tuesday, its weakest this year, still suffering from data last week that showed the economy grew at its slowest pace in over six years in the last quarter.

Prices of second-biggest exporter Thailand’s benchmark 5% broken white variety narrowed slightly to $410-$422 a tonne from last week’s $410-$430, traders said.

At an average of $416 per tonne, Thai rice is trading near its highest since June 2018, when prices plunged due to a sudden build-up in supply.

A firmer Thai baht, Asia’s best-performing currency this year, has kept Thai prices higher than those of main competitor Vietnam since the beginning of the year. Also keeping prices elevated were fears of a supply shortage due to a months-long drought earlier, and now floods, in rice-growing areas.

Thailand said flash floods caused by tropical storm “Podul” damaged over 240,000 hectares of agriculture land.

“Drought and floods have made prices high and uncompetitive, significantly dimming export prospects,” a Bangkok-based trader said. “Output will certainly be lower this year.”

Meanwhile, Bangladesh, also reeling from floods, is providing free seed and fertilizer to affected farmers for the next crop season, Agriculture Minister Abdur Razzaque said.

Floods in July washed away crops that would have yielded nearly 400,000 tonnes of rice, Bangladesh’s agriculture ministry estimates showed.

Prices of Vietnam’s 5% broken rice fell to $325-$330 per tonne on Thursday from $335-$340 last week on weak demand.

“Buyers from the Philippines haven’t placed any new deals this week ahead of a harvest there later this month,” a trader based in Ho Chi Minh City said.

Another trader in the city said demand from other markets was also muted, adding that Cambodia recently shut its door to Vietnam’s glutinous rice variety, pulling down its price by $100 from a recent peak of $710 a tonne.

Reporting by Khanh Vu in Hanoi, Patpicha Tanakasempipat in Bangkok, Ruma Paul in Dhaka and Rajendra Jadhav in Mumbai; editing by Arpan Varghese and David Evans

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