Global Rice News

India, the world’s largest rice exporter, has seen its shipments affected by the recent ban on white rice and broken varieties. The ban was imposed in July to address other countries’ food security concerns, leading to a 30% decrease in shipments and impacting about 12% of total global trade. The situation has been further aggravated by tensions in the Middle East, which have disrupted global shipping. As a result, global rice shortages are expected to worsen, especially for premium Indian basmati rice exports. Freight rates have doubled due to attacks on commercial ships by Iran-backed Houthi militants, causing a decline in Indian basmati rice exports.

Vijay Setia, former president of the All India Rice Exporters’ Association, stated that a quick solution to the problem in the Red Sea is not forthcoming, despite America’s intervention to stop Houthi attacks. The upsurge of violence in the Red Sea has led to an increase in the time it takes to ship cargo from India to the Middle East by three to four weeks. As a result, premium Indian basmati rice prices currently range from US$950 to $1,800 per tonne.

In addition, exports of parboiled rice from India have seen a record high price of between US$533-US$542 per tonne due to limited supplies and steady demand from Asian and African buyers. Private traders are facing limited availability of non-basmati rice varieties, longer shipping times, and more expensive freight costs to Africa and other places. Exporters are also facing disputes with buyers over old contracts.

Due to these challenges, Indian rice exports have declined, while Thailand and Vietnam, the world’s second- and third-ranked rice exporters, have been less affected due to fewer shipments through the Middle East. Indian rice is usually cheaper than Thai and Vietnamese varieties and is preferred in parts of Africa. However, slow output cuts by OPEC producers have kept oil prices steady, and the logistics nightmare has not impacted Thailand and Vietnam significantly.

Rice shortages may also be exacerbated by lower production in China and Indonesia. China has reduced production due to a decrease in area, and imports are not expected to make up the shortfall. In Indonesia, the planting season was delayed due to dry weather from El Nino, leading to increased imports and competition for other buyers.

The World Bank has reported a 4% increase in rice prices since its last update in mid-December, with dry conditions due to El Nino threatening key producing regions. India is not expected to ease up on rice exports until after the upcoming elections, and the June-September monsoon is also a factor. Southeast Asia, the Philippines, Malaysia, and West African countries will be most affected by India’s lower rice shipments. Climate change and ongoing wars are further contributing to supply woes.

In conclusion, the rice shortage caused by India’s export ban and disruptions in the Middle East is expected to worsen. Thailand and Vietnam may partially fill the supply gap, but the severity of the shortage and its duration cannot be predicted due to ongoing conflicts and climate change. India’s restrictions on exports are expected to be relaxed after the elections, but if they are maintained, prices will continue to rise.