Rice Market Squeeze: Punjab’s Shortfall and Weather Risks Prop Up Global Prices

The global rice market is entering a period of heightened uncertainty and strong price support, fueled by a confluence of adverse developments in key producing regions and the ripple effects from last year’s surge. Punjab, India’s rice heartland, is contending with declining paddy acreage and tenuous weather conditions, notably erratic rainfall and a tightening irrigation water supply. The Punjab Agriculture Department estimates a 2% drop in seeded area year-over-year, while market observers warn that continued water stress and potential early monsoon withdrawal could further depress the region’s output, projected at 11.61 million tons versus 11.85 million tons last year.

Rice prices, already up 20% globally in the past year, remain under pressure as India’s steady government procurement at an attractive MSP (USD 230/quintal) limits downside risk for local producers, but signals tighter future export availability. Weather uncertainty, diminished production in Punjab, and resilient global demand—especially from Africa and Southeast Asia—mean tight fundamentals. The international market is watching weather developments closely, with ongoing ENSO effects likely impacting Asian rice bowls.

📈 Prices

 

Type	Origin	Location	Price (EUR/ton)	Weekly Change	Date	Sentiment
Rice, black	VN	Hanoi	1.17	0.0%	2025-09-12	Bullish
Rice, all golden, sella	IN	New Delhi	1.05	0.0%	2025-09-06	Stable/Bullish
Rice, all steam, pr11	IN	New Delhi	0.56	0.0%	2025-09-06	Stable
Rice, long white 5%	VN	Hanoi	0.58	-3.3%	2025-09-06	Softening
Rice, white, non basmati (organic)	IN	New Delhi	1.61	0.0%	2025-09-06	Bullish
Rice, white, basmati (organic)	IN	New Delhi	1.91	0.0%	2025-09-06	Stable/Bullish
Rice, Jasmine	VN	Hanoi	0.60	-3.2%	2025-09-06	Softening

🌍 Supply & Demand

• India (Punjab): 2025 paddy acreage down 2.08% y/y to 7.277 million acres; output forecast at 11.61 mln tons (vs. 11.85 mln in 2024). Lower rainfall and irrigation cited as main causes.
• Global Production: Tightening stocks in exporting nations (India, Thailand, Vietnam). India continues export restrictions (bans on broken/non-basmati rice), limiting global spot supply.
• Import Demand: Africa and Southeast Asia increasing import demand amid tight local stocks and adverse weather.
• Government Policy: India maintains high MSP and assures full procurement, reducing short-term farmer risk but limiting free market activity.

📊 Fundamentals & Market Drivers

• USDA/WASDE: Recent monthly reports highlight shrinking global ending stocks and ongoing weather risks in India and Southeast Asia.
• Speculative Positioning: Funds hold net long positions in Asian rice contracts, betting on further disruption and price upside.
• Macroeconomic: Strong USD and freight tightness (Red Sea, Panama) further complicate cross-border trade for bulk rice exports.
• Historical Comparison: Last year’s rice report also cited weather volatility in India/Vietnam, but the current supply situation is even tighter.

☀️ Weather Outlook

• Punjab, India: Monsoon remains below average. Key dams and reservoirs are operating at 20–30% lower than long-term averages, with some rainfall expected in next five days but not enough to replenish volumes.
• Mekong/Red River Delta (Vietnam): Intermittent showers expected; moderate temperatures and humidity support ongoing harvests.
• Thailand: Sporadic rainfall with slightly elevated temperatures. El Niño and delayed monsoon exits present yield risk for late-planted areas.

🌐 Key Producer & Stock Comparison

Country	2024/25 Production (mt)	YOY Change	Ending Stocks (mt)
India	127.5	-1.5%	32.1
Vietnam	43.7	+0.5%	5.2
Thailand	28.0	0.0%	3.9
Paksitan	9.2	-5.0%	1.1
China	147.0	+1.0%	104.2

🧭 Trading Outlook

• Bullish bias remains given Punjab’s production risks, robust Indian MSP, and persistent export restrictions.
• Global end-user demand (Africa, Middle East) continues to surpass available new-crop offers, suggesting further export price support.
• Monitor weather developments in India/SEA—any further monsoon setbacks would trigger renewed price rallies.
• Short-term dips in Vietnamese/Thai offers (<1%) represent tactical procurement windows for buyers—but the overall tone remains firm.
• Hedge price exposure for contracts beyond Q4 2025; upside risks on supply constraints remain elevated.

📅 3-Day Regional Price Forecast

Exchange/Location	Current Price (EUR/ton)	Sentiment	3-Day Forecast
Hanoi FOB (VN, black)	1.17	Bullish	+1% to +2%
New Delhi FOB (IN, golden sella)	1.05	Stable/Bullish	+0.5% to +1.2%
New Delhi FOB (IN, pr11)	0.56	Stable	Flat to +0.7%