Global Rice News

Global Rice Prices Surge to 15-Year Peak Due to High Demand and Short Supply

Global rice prices have experienced a significant surge of 7% recently, reaching a 15-year peak. This rise is attributed to a combination of heightened demand and a shortage of 16 million tonnes in supply. The export restrictions imposed by India, one of the major rice producers, have played a significant role in driving up prices and impacting the rice markets in countries like Thailand and Vietnam. Despite varying pricing strategies among nations, there is an overall shortage of physical rice supply on a global scale. Challenges related to climate change faced by major producers like India and Indonesia are expected to further contribute to the firmness in rice prices, thereby affecting international trade.

Highlights

• Global Rice Price Increase: In the past month, rice prices in the global market have surged by 7-8%, reaching a 15-year high. This spike can be attributed to high demand and low supplies.
• Seasonal Factors and End of Season: The end of the season has led to a decrease in rice arrivals, which in turn has driven up prices. Despite good availability in India, the overall global supply of rice is low.
• Short Supply Due to India’s Ban: India’s ban on white and broken rice grades has resulted in a shortage of at least 16 million tonnes in the global market, accounting for almost a third of the annual trade.
• Price Increase in Various Countries: According to the International Grains Council, rice prices in Thailand have increased by 39%, Vietnam’s by 44%, and India’s parboiled rice by 40% in 2023.
• Export Dynamics: India’s ban on non-basmati white rice exports has contributed to the global supply shortage. Parboiled rice from India is currently priced at $525 per tonne, attracting an additional 20% export duty.
• Competitive Pricing by Countries: Different countries offer varying price quotes for rice. Thailand, Vietnam, and Pakistan have different rates, with Pakistan being the most competitive at $593-597.
• Vietnam’s Situation: Despite lower sales, Vietnam’s rice prices have reached their highest level since 2008 due to previously contracted deals in a context of tight supply.
• Global Trade Revision and Forecasts: The Food and Agriculture Organization (FAO) and the International Grains Council (IGC) have revised global trade figures. The IGC has lowered the estimate for the 2023-24 global trade by 4% to 50 million tonnes due to reduced buying interest from Asia and Africa. However, the US Department of Agriculture suggests a slight increase in supplies, lower trade, decreased consumption, and higher ending stocks.
• Impact of Weather Conditions: The production of rice in India, Indonesia, and Thailand has been affected by El Nino, leading to drought and prolonged dry periods that have impacted the overall global rice supply.
• Expectation of Firm Rice Prices: Rice prices are expected to remain firm in the upcoming months due to the anticipation of new crop arrival in Asia in February-March.
• Increased Demand from Countries like Indonesia: Countries such as Indonesia, which has plans to purchase 2 million tonnes of rice, are contributing to the heightened demand to meet domestic needs.

The current surge in global rice prices, driven by a complex interplay of high demand, seasonal factors, and export restrictions, highlights the intricate dynamics of the rice market. As countries grapple with supply shortages and changing weather patterns, stakeholders must navigate this challenging landscape. The sustained firmness in prices, coupled with increased demand from countries like Indonesia, sets the stage for a period of market volatility, requiring strategic decision-making by players in the global rice trade.

Source: Investing.com