1. We believe that the Government of India’s July 20 decision to introduce an immediateban on the export of non-basmati white rice will have both material implications forIndian inflation as well as substantial ramifications for trends in the global rice market.The immediate prompt for the decision was the June rise in the rate of Indian food priceinflation to 4.5 y-o-y.2. From a macroeconomic perspective, it seems unlikely that the Reserve Bank of India willbe able to cut interest rates from the current level of 6.50 before the end of 2023despite the softening of economic activity. We forecast that real GDP growth in India willslow from 7.2 in FY2022 to a below-trend rate of 6.3 in FY2022.3. At present, we have not revised our average rice price forecast for 2023 but we considerthis latest development to have concentrated risks to our forecast even more firmly tothe upside than was previously the case. As a result, we will be monitoring developmentsclosely and we do expect to see a pick-up in market volatility.4. The global rice market remains tight by recent historical norms, which the Indian ban willexacerbate. In conjunction with India’s September 2022 ban on the export of 100broken rice, between 30 and 40 of India’s rice exports are now offline. In conjunctionwith the supply-side risks associated with El Ni?o, we expect the export ban to keepupside pressure on prices.
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