India Rice Export Shipments Delayed on Heavy Traffic.

BALI, Indonesia – India, the world's largest rice exporter, has pending rice export shipments of more than 600,000 tons due to congestion at ports and strong demand, resulting in large costs of demurrage and shipment delays, analysts, cargo surveyors and traders said Thursday.

This is significant because it reflects India's inability to quickly ship out excess grains at a time when both demand and supply is strong. The pending shipments are almost equivalent to India's actual monthly rice exports.

Due to the heavy traffic at ports, rice sold now will be shipped out only in early December and therefore buyers looking for earlier shipments will have to turn to other costlier suppliers, such as Vietnam and Thailand.

In Kakinada port alone, there are ships loading or waiting for berth to load and export 500,000 tons of rice, Prem Garg, Managing Director, Shri Lal Mahal Ltd., a New Delhi-based major commodity trading company, said on the sidelines of the World Rice Conference.

A shipping vessel takes up to 40 days to get loaded with rice in Kakinada, the bulk of which is time in waiting, said an executive with a global commodity trading company.

However, executives at the conference expressed confidence that India's overall rice exports in 2012 may still hit a near record of almost 8.5 million tons, including 2.5 million tons of premium Basmati grades.

Mr. Garg puts it even higher at around nine million tons.

The last time India exported such large volumes of rice was nearly a decade ago when the government was selling the grain from its excess stockpile.

As monsoon rains taper off next month, loading of rice in ships is expected to accelerate. However, as previous orders are executed, fresh sales will take place and the line-up of shipping vessels at ports will continue to be large.

Shipments of imported fertilizers rise ahead of winter crop plantings, and during the December-March season, heavy traffic of export shipments of wheat, rice and soymeal are expected, said Tejinder Narang, advisor to Emmsons International, a New Delhi-based major commodity exporting company.

Lack of availability from Thailand has pushed up demand from India, whose share in global rice trade has jumped to 23% from 7% a year ago, Mr. Narang said.

In Kakinada port, there are 80 barges available but less than 75 are operating and they handle daily between 350 tons to 550 tons each, said A Ramakrishna, Managing Director of Ind-Andhra Agro Products Ltd.

The daily loading of rice in Kakinada is hardly between 15,000 tons and 20,000 tons, Mr. Ramakrishna said, citing examples of ships that waited for more than a month before they finally started loading.

There are between 30 to 40 ships waiting at the port for loading rice on any given day.

Nevertheless, demand is strong because India's rice is among the world's cheapest.

Thai 5% broken and 25% broken rice is being offered around $570/ton and $535/ton, free-on-board. Correspondingly, Vietnamese offers are at $455/ton and $420/ton, FOB. Indian rice is around $440/ton and $400/ton, FOB.

Around 75% of the current ordinary rice trades are taking place for white rice and demand for parboiled grades is limited due to ample supply in main buyer, Nigeria.

According to estimates of The Rice Trader consultancy, India exported close to 5.5 million tons of rice over January-August, including 1.9 million tons Basmati.

Source : online.wsj.com