Indian rice exports slow as Middle East war pushes up freight and insurance costs

India, which accounts for more than 40% of ‌world rice exports, usually ships more than the combined exports of the next three biggest suppliers - Thailand, Vietnam and Pakistan.

Rising freight rates are alarming both buyers and sellers, leading to a significant slowdown in ​the signing of new export deals, said Nitin Gupta, senior vice president at ​Olam Agri India.

"Freight rates are rising every day. Shippers are adding ⁠war surcharges and emergency fuel surcharges (EFS), making imports increasingly expensive for buyers," Gupta said.

Shipping ​insurance and freight rates have been rising since maritime traffic along the narrow Strait of Hormuz ​all but halted more than a week ago. The disruption to 20% of the world's oil shipments has raised global energy prices, including bunker fuel prices.

Exporters of non-basmati rice are currently executing old orders, ​and loading of berthed vessels is proceeding smoothly, but they are facing difficulties arranging ​logistics for new orders, said Himanshu Agrawal, executive director at rice exporter Satyam Balajee.

"Importing countries are holding ‌ample ⁠stocks, with a good amount still in transit, so there are currently no panic purchases from buyers. They are waiting for the dust to settle," Agrawal said.

India mainly ships non-basmati rice to markets such as Bangladesh, Benin, Ivory Coast, Guinea and Cameroon, while its ​premium basmati rice predominantly ​goes to buyers in ⁠Saudi Arabia, Iraq, Iran and the United Arab Emirates.

Shipments of Indian basmati rice destined for major Middle Eastern markets, including Iran, Iraq, ​Qatar, and Saudi Arabia, have been halted in transit due to ​the effective ⁠blocking of the Strait of Hormuz, said a New Delhi-based exporter.

"Sellers ... do not know when vessels will be unloaded or when they will receive payment," he said.

India's rice production jumped ⁠to a ​record high this year.

Mukesh Jain, an exporter, said ​it had enough to meet export demand, and that the rupee's depreciation was also helping, but that the logistical ​bottlenecks were deterring the signing of new contracts.