Rice stocks close higher as government considering easing export limits

Rice stocks were trading sharply higher on Tuesday after reports stated that the government is considering easing export limits on rice. LT Foods hit a fresh 52-week high of ₹296 before trading higher by over 7% at ₹277. KRBL was up 7.69% at ₹332.45 and hit an intraday high of ₹348.70. Chaman Lal Setia Exports saw gains of over 15% in early trade on Tuesday before paring some gains to trade higher by 11% at ₹228.98.

The government is considering making a move to ease restrictions on rice exports to avoid oversupply in the country before fresh crop arrives in October, according to news reports. Many rice exporters had demanded the lifting of restrictions on rice exports as the stock with the Food Corporation of India was more than 3.5 times the buffer amount.

Reports also said that the government may move to scrap the 20% levy on shipments of parboiled rice and introduce a fixed duty on the exports of white rice. Currently, exports of non-basmati and broken rice are completely banned while exports of basmati rice can be exported only above a set floor price. The restrictions were imposed to stabilise prices and ensure sufficient supplies of the crop.

Easing restrictions will benefit rice exporters, and millers, and also help the Minimum Support Price (MSP) scheme, analysts said. Further, lifting export restrictions will result in a reduction in the benchmark Asian rice prices that had surged to their highest level in 15 years in January 2024.

After receiving below-average rainfall in June, the monsoon has covered the entire country ahead of time. July is expected to receive above-average rainfall, which will further lead to higher farm yield and output. As of June 4, 2024, the Ministry of Agriculture has estimated the total rice production for the year to come in at 1,367 lakh tonnes compared to 1,357.55 lakh tonnes in the previous year.