Rice shipping delays come at bad time as consumer demand spikes

The global rice market is grappling with logistical disruptions at major supply ports caused by a lack of shipping containers at the same time a worldwide rush to stockpile food is spurring demand for the staple grain.

The logistics difficulties illustrate the way the Covid-19 pandemic has upended the global trade in finished goods and raw commodities.

As the pull of goods to Europe and the United States has left Asia short of the shipping containers needed to move materials, rice shipments from both India, the world's biggest rice exporter, and Thailand, the world's second-biggest supplier, are facing delays.

In India, ships are waiting up to four weeks to load rice, according to a Singapore-based executive at one of the world's leading rice trading companies. Thai exporters expect 2021 shipments should stay depressed after falling by 28 per cent in the first 11 months of 2020 because of the container issues and the high price of Thai rice relative to other growers.

But the Covid-19 pandemic has sparked a global surge in purchases of agricultural products from rice to soybeans, corn and meat. China, the world's biggest rice consumer, bought Indian rice in December for the first time, while Vietnam, the world's No. 3 exporter, has also purchased Indian rice.

"Global food hoarding is one thing that we have been seeing since late last year but now it shows how delicate the supply chain is when there was a surprise move by Vietnam to buy Indian rice," said Stephen Innes, chief global market strategist at brokerage Axi.

Still, world rice stockpiles are forecast to climb to an all-time high of 178.2 million tonnes in 2020/21, according to estimates from the US Department of Agriculture, underscoring how the issues are around logistics and consumers seeking lower-priced grains.

"As far as world rice inventories are concerned there are no major issues. But there is shortage of containers to ship rice and port delays in India, that are causing concerns," Innes said.

Thai rice prices surged to their highest since 2013 in April after top exporter India went into a lockdown to halt the coronavirus spread and remain 19 per cent higher than a year ago at $513 a tonne.

Vietnamese prices surged to a nine-year high last week of $502.50 a tonne on concerns of falling exports because of tightening supply ahead of the harvest that peaks in February.

That has left buyers with little choice but to seek Indian rice that sells about $384 per tonne.

"There is huge export demand, we are competitive on the price front, but we are unable to fulfil due to congestion," said B.V. Krishna Rao, president of the Rice Exporters Association of India, who said nearly 20 ships are waiting to load off the southeast Indian port of Kakinada.

Without containers to move shipments, some exporters are turning to break bulk ships, but with limited space at ports this is causing most of the congestion at Kakinada, said Himanshu Agarwal, executive director at Satyam Balajee, India’s biggest rice exporter.

African rice buyers will likely face the biggest impact from the rising shipping costs and resultant increase in grain prices.

"They are mainly small buyers, taking rice in containers. Container freight from India to Africa, depending on which country you are looking at, has jumped to $150 a tonne, from $50 a tonne in November," said the Singapore-based rice trader.

Even countries that typically meet their own rice consumption are importing, adding to the demand pull.

Bangladesh's rice imports may climb to 2 million tonnes in the year to June, the highest in three years, as local prices jumped to an all-time high on tight supplies, a senior government official said on Tuesday.

Bangladesh is the world's third-biggest rice producer at about 35 million tonnes of output, but most of that is used to feed its population of more than 160 million.