global rice prices increase by 7% in one month due to strong demand and limited supplies
Published on: December 28, 2023.
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Rice Exporters Report Surge in Prices in Global Market
The global market for rice has seen a significant increase in prices, rising by 7-8 per cent in the past month. This surge has resulted in rates reaching a 15-year high due to higher demand and low arrivals as the season comes to an end, according to traders and exporters. While India’s availability of rice is good, prices remain firm. New Delhi-based exporter Rajesh Paharia Jain explains, “One reason for prices to rise is that it is the end of the season. Though the availability in India is good, prices are ruling firm.”
Furthermore, there is a shortage of at least 16 million tonnes (mt) of rice in the global market, which is nearly a third of the annual trade. This shortage is due to India’s ban on white and broken rice grades. S Chandrasekaran, a trade analyst, explains, “Physical supply of rice is low in the global market, whereas demand is higher. In view of India’s ban on white and broken rice grades, there is a short-supply of at least 16 million tonnes (mt) in the global market which is nearly a third of the annual trade.”
The International Grains Council reports that Thailand’s rice prices have increased by 39 per cent and Vietnam’s by 44 per cent in 2023. India’s parboiled rice has also increased by 40 per cent during the same period, with exports of non-basmati white rice being banned.
Jain reveals that parboiled rice is quoted at $525 a tonne free-on-board in India, attracting an additional 20 per cent export duty. Parboiled rice in India is available for exporters at ₹29,000 a tonne for 25 per cent broken and ₹31,000 for 5 per cent broken. Comparatively, Thailand’s parboiled 100 per cent sortexed rice is quoted at $650 a tonne, while Vietnam offers it at $663-667. The most competitive price is from Pakistan at $593-597.
The Food and Agriculture Organisation’s rice update states that despite a dearth in sales, Vietnam prices have risen to their highest nominal level since 2008. This is due to traders executing previously contracted deals in an overall tight supply context.
The US Department of Agriculture, in its World Agricultural Supply and Demand Estimates (WASDE) December report, predicts a slight increase in supplies, lower trade, less consumption, and higher ending stocks for rice in the 2023-24 global outlook. The report states, “Supplies are raised just 0.2 mt to 692.8 mt, primarily on larger production in Thailand, which has greater water availability than previously expected.”
While India has implemented curbs on exports with bans on white rice, a 20 per cent export duty on parboiled rice, and a stipulation of $950 a tonne for registering basmati exports, rice prices in the global market continue to rise. This is due to lower kharif rice production in India caused by the impact of El Nino, resulting in drought and deficient rainfall.
Traders predict that rice prices will remain firm in the coming months as the new crop in Asia is expected to arrive in February-March. Countries like Indonesia, which is in need of 2 mt, are also looking to buy more rice to meet their domestic demand.
Source: The Hindu Business Line
