Impact of Dry Soil on Asia’s Rice Output in Early 2024 to Exert Pressure on Supply
Published on: December 4, 2023.
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Asian off-season rice production is expected to decline in early 2024 due to dry planting conditions, shrinking reservoirs, and continued El Nino weather. This reduction in yields will further tighten supplies and lead to food inflation. India, the world’s biggest rice exporter, and Thailand, the second-largest supplier, are likely to see a decline in production from their off-season crops in the first quarter. Indonesia, a leading rice importer, is also facing challenges as farmers plant their crops after suffering from drought.
Analysts have expressed concerns about water availability and low reservoir levels, which could result in yield losses from off-season crops. The dry-season crops in Indonesia rely on reservoirs that have decreased during the dry season. This could affect water supply for the 2024 crops.
The global rice supplies have already tightened this year due to hot and dry weather caused by the El Nino weather phenomenon. Major exporting and importing countries have experienced reduced production. As a result, rice prices in key export hubs in Asia have climbed to their highest level in 15 years, increasing by around 30-40% in 2023. India restricted its rice exports, contributing to the rise in prices.
The El Nino weather is expected to persist through April-June 2024, according to a U.S. government weather forecaster. Japan’s weather bureau has also predicted an 80% chance of the phenomenon continuing through the northern spring. With lower rice production and the risk of food inflation, India is likely to maintain export restrictions until at least the middle of next year. Similarly, Thailand is expected to have a lower surplus for exports.
In response to the tightening exports and strong demand, the Philippines and Indonesia, two of Asia’s top importers, are securing supplies. The Philippines has given private traders a month to buy an additional one million tons of rice to boost local supply and manage prices. Indonesia’s state food procurement agency, Bulog, has secured contracts for one million metric tons of rice imports.
The winter crop in India, planted in December-January and harvested around March, is estimated to decrease by one-fifth to approximately 20 million metric tons, according to exporters. Soil moisture levels in many producing states are below normal, and reservoirs are holding less water than the 10-year average.
Indonesia has experienced extremely dry conditions over the last four months, reducing soil moisture and delaying rice planting. Farmers are expected to start planting in December, with the harvest delayed by two to three months to May-June. The country’s agriculture minister has stated that Indonesia’s “gorilla El Nino” will last until February.
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