Nearly a third of India’s rice exports for this month are stuck due to a shortage of freight trains

Nearly a third of India’s rice exports for January 2022 are stuck due to a shortage of freight trains. Most traders have stopped signing February export contracts to avoid demurrage charges, industry officials told Reuters.

The slowdown in exports from India, the world’s biggest rice exporter, has allowed rival suppliers such as Thailand, Myanmar and Vietnam to increase overseas sales at higher prices. Slowing exports could force the Indian government to increase procurement from farmers

Shipments of more than 500,000 tonnes of non-basmati rice that need to be transported to ports on India’s east coast from the central state of Chhattisgarh have been stuck due to the shortage of freight trains, dealers said. They are part of around 1.5 million tonnes of rice that India had planned to export this month.

Railway authorities have diverted wagons to ship fertilizers and to serve thermal coal to power plants to ensure adequate power supply this winter after power plants ran out of coal a few months ago.

The delay in Indian shipments is hitting exporters hard as vessel rates have risen to $30,000 per day and some exporters need to pay as much as $500,000 in demurrage charges, wiping out their entire margin.

Traders have started quoting higher prices for overseas shipments to cover higher demurrage charges, and prices for India’s 5% broken parboiled variety of rice have risen to $380 per tonne, the highest in six months. Higher prices and shipping delays are prompting some buyers to switch to rival suppliers such as Thailand and Myanmar, said B.V. Krishna Rao, president of India’s Rice Exporters Association.

Thailand’s 5% broken rice prices rose last week to their highest since mid-July 2021 at $404-$405 per tonne. “We have requested the Ministry of Commerce and Industry to help us by increasing railway wagons’ availability,” Rao said. India cornered nearly half of global rice shipments in 2021 as its exports surged 45% from 2020 to a record 21.4 million tonnes, or more than the combined exports of the next three largest exporters Thailand, Vietnam and Pakistan, according to provisional government data.

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