Basmati prices are expected to be low this harvest season. Price of early maturing variety of Basmati Pusa 1509 estimated at INR 2600 – INR 2800 per quintal. Low demand of basmati rice internationally will affect the prices in the coming months. Indian Basmati exports expected to decrease due to inconsistent Payment mechanism with Iran, Saudi Arabia lowering pesticide residue and decreased exports to Europe.
Bumper Production of Food Grains
The production of basmati paddy is probable to increase in this harvest season. Agricultural minister, Narendra Singh Tomar said, “The condition of Kharif crop is good and the country is likely to have production of food grains.”
According to NBHC, production of food grains in India estimated at 140.57 million tonnes. Marginal increase of 8.4 million tonnes from the average production of past five years.
Increase in Kharif Crop Acreage
According to National Bulk Handling Corporation (NBHC), this year India has received the best monsoon in the past 25 years, with almost 84% of the region getting normal or excess rainfall. Thereby, aiding in increased production of food grains in India.
In addition, the increased output of Basmati rice due to increase in sown area by 2.8%. More than 20 percent farmers shifted their non-basmati crop to basmati crop, owing to high export demand last year.
Booming Export and Low carry over stock
India witnessed booming basmati export of 44.1 million tonnes in 2018-19 compared to 40.5 million tonnes in 2017-18. This encouraged farmers to grow more basmati crops this year. Also, it has led to low carry over stock, thereby increasing the demand.
Rice witnessed a fall in export by 9% this financial year. traders are hopeful of good exports similar to FY 2018-19.
For this season farmers in Punjab and Haryana are getting INR 2600 per quintal for 1509 basmati variety, which is a marginal decrease in price as compared to previous year.
Shipments Stuck at Iran ports Continue to wary Exporters
Ever since US imposed sanctions on Iran, rice shipments are stuck at Iran port and payments are delayed. In addition, payments of 1 lakh tons of Basmati rice that is INR 1000 crore has been delayed.
In conclusion, expect payment mechanism with Iran to conclude otherwise negative sentiments would prevail in the market. Indian rice traders feel that this could lead to decrease in prices of Basmati rice this season.