Global rice market remains stable despite weather risks
Published on: May 6, 2024.
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Rice Prices Stabilize, but Market Remains Vulnerable to Weather Risks
In a recent interview, Rubens Marques, the chief executive for South and Southeast Asia at commodity merchant Louis Dreyfus Co (LDC), stated that global rice supplies have stabilized after last year’s rally. However, Marques also emphasized that the market is still vulnerable to risks posed by dry weather caused by the El Nino weather phenomenon.
Last year, rice prices in key Asian export hubs reached their highest levels since 2008 due to an export ban imposed by India, the largest rice shipper in the world. The combination of the export ban and Indonesia’s large purchase of rice resulted in a tight supply situation, leading to an increase in prices.
While the situation has improved and supply and prices have stabilized, Marques warned that rice supplies are still susceptible to adverse weather conditions. Climate change, particularly the El Nino phenomenon, has had and may continue to have an impact on rice production due to hotter and drier weather in rice-growing regions in Asia.
Marques emphasized the importance of monitoring reservoir levels in key producing countries to assess the impact on irrigated crops. The coming months will be crucial in determining how weather conditions affect production.
The unpredictability of weather events and the difficulty in addressing imbalances caused by climate change are additional challenges faced by the rice market. Last year’s price rally resulted in lower demand from some countries, particularly in Africa, a price-sensitive market. However, Marques believes that the market has effectively rationed demand.
While rice prices have stabilized, it is important to remain vigilant to weather risks and market fluctuations. LDC, as one of the largest rice merchants, continues to supply buyers in Asia, Africa, and the Middle East.
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