Rice prices have risen to their highest level in 11 years, due to low supplies and unpredictable weather patterns. Due to increasing payouts to farmers, India, the world’s largest rice exporter, has seen a rise in rice prices. Despite promises of increased production, the global rice price index reported by the Food and Agriculture Organization is still high. The lack of a fully developed El Nino weather trend, which generally reduces rainfall in Asia, has made the supply-demand imbalance worse. Major rice-producing countries are expected to have healthy crop yields, according to the US Department of Agriculture, although global trading houses expect production to suffer as a result of El Nino’s effects. Rice prices have already increased due to the limited supply, raising fears that they may climb further if production continues to fall.
NewsOTG gathered that by the end of 2023/24, inventories are predicted to hit a six-year low of 170.2 million tonnes, mostly due to declining stocks in China and India. In the event of a dramatic decrease in yields, prices may increase by 20% or more. Due to below-average rainfall, Thailand, the second-largest rice exporter, has already advised farmers to grow just one rice crop. The monsoon’s less-than-usual rainfall and India’s tardy start to summer-sown rice planting have worried Prime Minister Narendra Modi‘s Bharatiya Janata Party as elections approach. The government’s focus on reducing food inflation may result in additional export restrictions, putting additional pressure on supplies globally. Countries like Indonesia and the Philippines have been forced to secure rice imports from Vietnam, a longstanding provider, due to the tightening supply situation. Indonesia recently inked an unusual arrangement with India to buy 1 million tons of rice in anticipation of probable El Nino disruptions.
African nations that are price-sensitive have curtailed their demand, but a rise in rice prices around the world could result from reduced Indian exports. To make up for anticipated supply shortfalls, Myanmar, Pakistan, Thailand, and Vietnam may need to expand their exports by 3 to 4 million metric tons. If El Nino continues to have an influence on output, rice, which was previously a buyers’ market, could potentially turn into a sellers’ market. Future rice supplies are unpredictable, which highlights the difficulties governments and people around the world are facing as they deal with rising food costs and the requirement to create strategic stockpiles.