CHIANG MAI (October 23 2008): Saudi Arabia, a leading rice importer in the Middle East, is planning to build up a buffer stock for aromatic basmati rice and is in talks to buy at least 200,000 tonnes from India, traders said on Wednesday. "The message that we got is that they will soon visit India to negotiate a deal," said one Indian basmati rice exporter on the sidelines of an industry seminar in Chiang Mai. 

"They have said 200,000 tonnes, which is a very small quantity for a country like Saudi Arabia. They will require half a million tonnes just for the buffer and they will buy from Pakistan also."

Saudi Arabia imports 800,000 tonnes of long-grain basmati rice annually, with the bulk of 700,000 tonnes from India and the balance shipped from neighbouring Pakistan. Traders said Saudi Arabia was likely to sign a deal this year and it could be a government-to-government deal. 

"They will make an agreement within the next two months and by the end of December the business should be concluded," another Indian rice trader said. One Pakistani rice exporter also said he had heard Saudi Arabia was looking for additional cargoes for a buffer stock but had no ideas on the quantity. "They need to build a buffer, like other nations are doing." Indian basmati rice was quoted around $1,250 per tonne FOB (free on board), sharply down from a record high of more than $2,400 in July, when prices shot up due to concerns over supplies.

 

Courtesy Copyright Reuters, 2008