Nearly a third of India’s rice exports for this month are stuck due to a shortage of freight trains and most traders have stopped signing February export contracts to avoid demurrage charges, industry officials told.
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. They are part of around 1.5 million tonnes of rice that India had planned to export this month.
“Cargoes cannot move from producing centres to ports because of freight train scarcity,” said Nitin Gupta, vice president of agricultural commodities trader Olam India’s rice business.
“There is no clarity on the availability of trains so nobody is offering fresh cargoes.”
Railway authorities have diverted wagons to ship fertilizers and to serve thermal coal 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, said Himanshu Agarwal, executive director at Satyam Balajee, India’s biggest rice exporter.
Traders have started quoting higher prices for overseas shipments to cover higher demurrage charges. 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.
“We have requested the Ministry of Commerce and Industry to help us by increasing railway wagons’ availability,” Rao said.