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India’s non-basmatic exports ban comes amid shortages of other grains such as wheat due to a suspension of the Black Sea deal

Grain prices are set to surge again after India’s rice export ban threatened global supply – adding pressure to an already volatile market following Russia’s withdrawal from the Black Sea deal.

The Indian government has last week set in motion a ban on exports of non-basmati rice due to rising domestic prices and a production shortfall.

Later-than-usual monsoon rains damaged crops and disrupted transportation of rice in the country, forcing the government to temporarily halt exports of non-basmati white and broken rice – which accounts for around half of last season’s exports, or 10 million Mt – Mintec data showed.

“A ban on Indian rice could create global food inflation concerns and particularly hit African countries,” which were highly dependent on supply from one of the world’s largest rice exporters both for human consumption and animal feed, Mintec’s commodity analysts said.

India’s move has ramped up concerns about a global food crisis. It comes as Russia has brought to an end the Black Sea grain deal – the UN-brokered agreement between Ukraine and Russia that safely allowed the movement of cereals from the war-torn region.

“A tight rice market could spur global food inflation as this will also have a knock-on effect on the wheat market, in which stocks are also looking quite tight,” Mintec analysts added.

Meanwhile, the current European heatwave has also affected cereal crops across Portugal, Spain, Italy and Greece, fuelling further fears of shortages and price hikes.

When stocks of one grain shrink, buyers typically look to alternative grains. But with both rice and wheat under pressure, global markets look set for another round of price increases, experts warned.

Read more: Food security alert after Ukraine grain deal falls through

India accounts for more than 40% of world rice exports, reaching 22.5 million Mt in the 2022/23 season – more than the combined shipments of the world’s next four biggest exporters: Thailand, Vietnam, Pakistan and the US.

However, a hit to production in the 2023/24 season has meant less available supply for Indians, who have been paying over 11% more for rice now than they were a year ago, according to the Ministry of Consumer Affairs, Food and Public Distribution.

Last September, India imposed a 20% duty on exports of a series of rice categories, including unmilled white rice and husked brown rice, fuelling fears of food inflation.

But the move failed to curb foreign demand significantly as extreme weather also hit other production countries.

Mintec July data also shows rice stock prices have been consistently rising in the India, Thailand and Vietnam markets since the September duty announcement (19%, 25% and 18% respectively).

International sales of rice jumped by 35% in the year to June, which led to a 3% in domestic prices over the past month alone.

At the same time, European wheat stock prices have shot up since Russia pulled out of the deal on 17 July, claiming sanctions are preventing it from properly exporting its own foodstuffs.

Wheat milling on the Euronext Paris stock market was trading at €267.25 per tonne on 24 July, up 12% from €238.25 per tonne on 17 July.

“Sellers have expressed to Mintec that they believe prices may continue to rise due to the volatile situation”, analyst Kyle Holland said.

Rabobank’s head of agri-commodity markets Carlos Mera added: “Ukraine will now be forced to export most of its grains and oilseeds through its land borders and Danube ports.

”This will significantly drive up transportation costs and pile further pressure on Ukrainian farmers’ profits. The knock-on effect of this is it could prompt them to plant less next season, placing further pressure on supplies going forward.”

He said the situation meant poorer countries in Africa and the Middle East will be more dependent on Russian wheat.