MUMBAI, June 12: India is likely to export 4.4 million tons of rice in 2007, almost the same as a year ago, the United Nation's Food and Agricultural Organisation (FAO) said in its latest outlook.

The report said Indian rice export prices were expected to increase with the state-run grain procurement agency Food Corp. of India (FCI) setting a higher rate for purchases from farmers and a supply squeeze in aromatic basmati rice.

The rise of the rupee against the dollar will also make Indian exports dearer, the report said.

The Indian rupee has strengthened against the dollar to reach a nine-year peak of 40.28 on May 28. The rupee was 40.702-712 per dollar on Tuesday. India's Commission for Agricultural Costs & Prices has recommended a minimum support price of Rs675 for 100 kg of grade 'A' paddy (un-milled rice) and Rs645 for 100 kg of common varieties during the 2007-08 (July-June) season.

This is an increase of Rs65 per 100 kg over the price offered in the 2006-07 procurement season.

The report said global basmati rice prices are likely to rise, reflecting supply shortages of the aromatic variety in India and Pakistan.

“There's more demand this time as many buyers from the Middle East are opting for Indian basmati instead of basmati from Pakistan, hence we are facing a shortage,” said a senior executive with Amritsar-based Lal Qilla Rice.

“The prices of traditional Indian basmati rice are ruling at $1,400 per ton compared with $700 a year-ago,” he added.

India produced 91.05m tons of rice during the 2006-07 crop year compared with 91.79 million tons in the previous year, as per the latest government estimates.

The report said strong import demand is expected to drive international trade in rice to a new high of 30.2 million tons in 2007, largely spurred by a return of Indonesia as a major rice importer. FAO has revised India's wheat imports in 2007-08 to 3 million tons, up one million tons over its May forecast, but much lower than 6.5 million tons of imports a year ago.

But FAO said the forecast for India's wheat purchases were tentative as much would depend on the final outcome of this year's harvest and price developments in the domestic market.

India's state-run State Trading Corp. this month scrapped a tender for one million tons of wheat imports on high prices.

FCI has procured 10.79 million tons of wheat as on June 11, compared with a total procurement of 9.23 million tons last year.

India's wheat production for 2006-07 is seen at 73.70m tons compared with 69.35 million tons, as per latest government data.—Reuters