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Militant attacks in Red Sea cause 5–10% drop in domestic basmati prices


Militant attacks in the Red Sea cause a 5–10% drop in domestic basmati prices

Exports of basmati rice have decreased due to militant attacks on merchant ships in the Red Sea, causing a 5–10% drop in domestic basmati prices, according to exporters.

The decision of major shipping lines to avoid the Suez Canal route due to Houthi attacks has also impacted sunflower oil imports from Russia and Ukraine.

Sunflower oil prices in the domestic market are expected to rise by 3-4% as international prices have risen by $30 per tonne in the last week to $940 per tonne, according to trade insiders. According to basmati exporters, the export market has slowed, and shipping costs to places like Jeddah, Yemen, Beirut, and Durban have increased multiple times in some cases.

Red Sea crisis

Before the Red Sea crisis, they said the freight charge to Yemen was $850 per container, but it has now risen to $2,400. Similarly, the freight rate to Jeddah has risen from $300 to $1,500 per container. The rate to Durban has risen from $700 to $1,200 per container.

“Buyers are not taking cargo this time due to the freight increase,” said Vijay Setia, former president of the All India Rice Exporters Association. “As a result, prices of basmati rice have fallen in the domestic market now.”

India exports 4–4.5 million tonnes of basmati rice each year. The Gulf countries are the country’s largest buyers, accounting for nearly 80% of basmati exports.

Edible Oil Import

While Maersk has stated that it will resume operations on the Red Sea route, exporters claim that the shipping line has yet to announce a start date. Sunflower oil importers reported a $30 per tonne increase in import prices, which will impact domestic sunflower oil prices.

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In addition, if sunflower oil imports are diverted through other routes, the arrival time from the Russia-Ukraine region will increase to 40 days instead of 28, according to Sandeep Bajoria, CEO of Sunvin Group, an edible oil importer. “Though there is a good supply of edible oils in the Indian markets, the delay and price rise in imported oil will have to be passed on to consumers by the edible oil companies.”

According to the Solvent Extractors Association of India, India’s edible oil imports increased by 22.15% to 15.47 million tonnes (mt) in the first 11 months of the oil year 2022–23 (November 2022–October 2023) from 12.66 mt the previous year.

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