As the year wraps up, the global rice market is making headlines with a staggering 7-8% price surge within the past month, reaching a 15-year pinnacle. Traders and exporters attribute this upswing to a perfect storm of heightened demand and dwindling supplies, creating a unique market scenario.
A 15-Year High in Commodity Rice And International Grains Council Insights
Despite ample availability in India, the season’s closing sees prices standing strong. The physical supply of rice globally is running low while demand is rising. India’s ban on specific rice grades contributes to a short collection of approximately 16 million tonnes globally, nearly a third of the annual trade.
According to the International Grains Council, Thailand witnessed a 39% surge, while Vietnam experienced a whopping 44% increase in rice prices throughout 2023. India’s parboiled rice follows suit with a 40% surge, given the ban on exports of non-basmati white rice.
A Global Glimpse
The Food and Agriculture Organization’s rice update acknowledges Vietnam’s prices soaring to their highest level since 2008, reflecting tight supply conditions. However, the International Grains Council revises the global trade estimate for the 2023-24 season down by 4% to 50 million tonnes due to “softer buying interest” from Asia and Africa. In contrast, the US Department of Agriculture’s December report presents a nuanced outlook for the global rice market. It anticipates a slight supply increase, lower trade, reduced consumption, and higher ending stocks. The rise in supplies is primarily attributed to more significant production in Thailand.
Domestic Factors and Climate Impact on Rice Production
India’s recent restrictions on rice exports, including the ban on white rice shipments and the imposition of export duties on parboiled rice, contribute to the global price surge. The stipulated $9,50 per kg or €8,55 for registering basmati export consignments adds to the intricate market dynamics. India’s kharif rice production faces a 3.8% dip due to the impact of El Nino, resulting in a dry spell in August, the driest in 120 years.
The global rice market has witnessed an unprecedented 7-8% surge within the past month, propelling prices to a 15-year high. A perfect storm of heightened demand and dwindling supplies, compounded by India’s export restrictions, has created a unique market scenario. Despite India’s ban on specific rice grades, global demand outpaces supply, contributing to a short collection of approximately 16 million tonnes globally.
The International Grains Council revised global trade estimates for 2023-24, down by 4%, reflecting “softer buying interest” from Asia and Africa, while the US Department of Agriculture anticipated a slight global rice market outlook. This surge in global rice prices underscores the delicate balance in the world’s food markets, highlighting the interconnectedness of global economic, climatic, and geopolitical factors that shape agriculture.