Pakistan’s 2025 rice export landscape likely to change as India lifts ban
Pakistan’s rice production forecast for 2024-25 is revised to 9.5 million mt, with exports expected to drop 11.48% to 5.8 million mt. India’s return to the market intensifies competition. Pakistan remains competitive in Southeast Asia, East Africa, and the EU, but faces challenges from India’s lower prices and fluctuating freight rates, especially in the Middle East.
According to data sourced from the latest US Department of Agriculture report, Pakistan’s rice production forecast for the 2024-25 season has been revised to 9.5 million mt, reflecting a 3.65% decrease in potential area and yield. Meanwhile, projections for rice exports have declined by 11.48% year over year for the 2024-25 marketing year (November-October), estimated at around 5.8 million mt, based on the latest USDA data.
Pakistan’s demand dynamics are anticipated to shift for the upcoming year, especially with India’s re-entry into the market after lifting its ban on white rice exports.
Pakistan is one of the top five largest rice exporters globally. It benefits from favorable planting conditions and the likelihood of sufficient irrigation water throughout the growing season, which suggests a promising harvest.
In FY 2023-24, Pakistan’s rice exports nearly doubled, driven by an abundant harvest, India’s export ban, competitive pricing, and increased demand from countries namely Malaysia and Indonesia.
Pakistan’s rice demand and market trends
However, with India’s rice exports reopening with a minimum export price of $490/mt on Sept. 28, 2024, following the removal of MEP on Oct. 23, 2024, Pakistani exporters are facing tough competition in the Basmati and Non-Basmati markets, as Indian exporters have re-entered the market with competitive prices.
It is expected that demand dynamics will shift significantly for 2024-25 with India’s re-entry into the rice trade.
At present, most rice supplier origins are adjusting to India’s prices, and a bearish trend prevails across markets. Pakistan faces stiff competition against Indian prices. However, Pakistan and India remain the two most competitive suppliers in Asia.
Platts, part of S&P Global Commodity Insights, assessed Pakistani 5% broken white rice (WR) at $445/mt FOB on Dec. 31, down $3/mt on the month and $143/mt lower year on year. This highlights a downtrend in the country’s rice market. Similar downward trends have been reported for other WR varieties due to the overall bearish trend.
Africa
In the marketing year 2023-24, Pakistan capitalized on India’s absence from the international rice trade to penetrate various West African markets. However, as we move into 2024-25, the price sensitivity of West African buyers indicates a likely return to sourcing rice from India. In price-sensitive regions such as Benin, where parboiled rice is predominantly consumed, Indian rice remains the most competitively priced option, giving India an edge.
In East African countries such as Johannesburg, Kenya and Mauritius, where white rice is preferred, Pakistan does maintain a foothold in the market. Notably, Pakistan benefits from logistical advantages in freight and delivery times, as it incurs lower transit costs for Pakistani sellers, enhancing its competitiveness in these regions.
East Africa is anticipated to continue being a potential market for Pakistan’s white rice (WR). However, fluctuating freight rates pose a significant concern, as they could influence demand from East Africa and lead buyers to consider other suppliers, given that final costs will play a crucial role in their decision-making process.
China
Pakistan’s rice exports to China primarily consist of non-Basmati, lower-grade, higher-percentage broken rice categories destined for animal feed. Exports to China decreased significantly for 2023-24 compared to the previous marketing year 2022-23. However, in the new crop year (2024-25), sources report increasing inquiries from China not just for broken rice but also for 5% WR. Thus, Pakistani exporters are likely to capitalize on this opportunity. However, quality remains a critical consideration for Chinese buyers, according to Pakistani sources.
With import quotas from China expected to be issued in mid-January, exporters are optimistic about potential demand, hoping the market will stabilize and that China will return as a significant buyer after a period of reduced demand following India’s ban on WR.
A Pakistani exporter quoted, “Chinese buyers have been actively looking for prices of WR. However, they are very specific about the quality. It also depends on prices at which Indian markets settle since Chinese buyers may be willing to pay a $10-$15 premium for Pakistani rice, but not more than that.”
Southeast Asia
Indonesia has been a significant buyer of Pakistani rice. Indonesia’s Bulog has shown strong demand for Pakistani rice in its recent tenders, given its competitiveness compared to other origins. In Pakistan’s FY 2024 (July-June), Bulog awarded 13 lots to Pakistani suppliers, totaling 372,550 mt of 5% broken WR in the last two tenders. Pakistani exporters have noted that, despite the current bearish market trend, Bulog’s purchases have contributed to some price stability for Pakistan.
Malaysia and the Philippines are other significant buyers of Pakistani rice. Market sources have mentioned that Philippine buyers are strict about quality.
EU
European markets primarily consume Basmati rice, with India and Pakistan as the only two major producers competing for this market. In the last year (2023-24), Pakistani Basmati rice gained an advantage by supplying varieties such as Super Kernel Brown Basmati to European countries.
However, India’s re-entry into the market has intensified competition, particularly as prices for Basmati rice in Pakistan have firmed due to local price increases caused by crop shortages from weather and climate issues, as well as low recovery rates for milled rice due to a high percentage of broken rice in the harvest. The notable price difference between Indian and Pakistani Basmati rice is likely to influence demand, as European buyers may opt for the cheaper source or seek alternative consumption options.
Middle East
Middle Eastern countries primarily consume Basmati 1121 Steam and Sella varieties, where India holds a competitive edge in supply. This situation intensifies competition for Pakistani Basmati suppliers. Moreover, geopolitical issues in the Middle East lead to uncertainty and fluctuating freight rates, likely affecting demand from these destinations, according to sources.
Pakistani exporters plan to diversify their markets in the coming months to enhance the quality assurance of their exports and tap into new opportunities, including non-traditional regions in Africa, Central and South America and the Far East. According to market sources, they are targeting $5 billion in rice exports by 2025.
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Source : S&P Global
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