Global rice prices have hovered near 11-year highs as El Nino threatens yields in major rice producing countries. India's rice export prices have risen 9 percent to a five-year high, while Thailand and Vietnam are at their highest in more than two years.
El Nino will affect harvests in all rice-producing countries
On June 8, the National Oceanic and Atmospheric Administration issued an El Nino alert, declaring that the climate phenomenon had already occurred. By winter, there is an 84 percent chance that El Nino will be "moderate to strong." In late June, the journal Nature reported that if El Nino is severe, it has the potential to push global temperatures to record or near-record highs in 2024. On July 4, the World Meteorological Organization concluded that the first El Nino phenomenon in the tropical Pacific Ocean in seven years, and the global will have destructive weather and climate patterns are almost certain.
The world's major cereal exporters are Argentina, Australia, Canada, the European Union and the United States. The main rice exporters are India, Pakistan, Thailand, the United States and Vietnam. With the exception of the European Union, most of the world's major food producing regions are likely to be hit by El Nino, resulting in reduced production, while the Horn of Africa may experience food security problems due to extreme weather.
Global rice prices have surged to an 11-year high
Rice is grown mainly in Asia, where El Nino threatens production in major producing countries and has added to upward pressure on global rice prices, which are already at 11-year highs.
India, Thailand and Vietnam are the major exporters of rice, with India accounting for more than 40% of world rice exports, with total exports reaching 22.5 million tonnes in 2022/2023. India's rice export prices have risen 9% to a five-year high, while Thailand and Vietnam are at their highest levels in more than two years.
India's grain purchase policy has had a significant impact on rice prices, with new minimum support price increases and rising domestic costs leading to higher export prices for Indian rice, triggering a ripple effect in other rice suppliers.
As of Friday, India's summer rice acreage was down 26 percent from a year earlier, according to government data, due to 8 percent less monsoon rainfall than usual.
Affected by the El Nino phenomenon, the recent drought in some parts of Thailand has decreased the rainfall in the rainy season compared with previous years. According to the data, as of now, Thailand's national precipitation in 2023 has decreased by 28% compared with the same period in 2022.
Thailand is an agricultural powerhouse, exporting about half of its total agricultural output, is the world's second largest rice supplier, and also exports 80% of its sugar. But this year, Thailand's sugar production has fallen for the first time in three years, and the supply to the global sugar market will be reduced accordingly. In addition, rice, rubber and other crops in Thailand have also been affected to a certain extent, and the country's status as the world's second largest rice supplier may be threatened.
Despite forecasts of near-record production in the world's top six leading producers, including Bangladesh, China, India, Indonesia, Thailand and Vietnam, global rice prices continue to rise and El Nino is expected to affect rice production in several countries.
In addition, dwindling stocks in China and India, combined with rising demand, have tightened supply and demand conditions in recent years, further pushing up rice prices.
The Food and Agriculture Organization's Global Rice Price Index shows that global rice prices have hovered near 11-year highs due to weather factors.
According to the comprehensive market analysis, the impact of El Nino is not limited to one country, it affects rice production in almost all producing countries, and if the yield falls significantly, the price may rise more.
International rice export prices are still rising
Indian rice export prices extended their rise this week to a five-year high, continuing to be supported by supply concerns, Reuters reported on July 6. Rice prices in Vietnam and Thailand are near two-year highs.
Indian steamed rice with 5 percent crushing was priced at $412-420 per ton, up from $409-416 last week. An exporter in Mumbai said demand was slowing at a high level but rice prices were still rising due to limited supplies and higher government purchase prices. Vietnamese rice, which is 5 percent broken, was trading at $500 to $510 a tonne on Thursday, flat from last week.
"Demand is strong and exporters are actively buying from farmers to stock up for export contracts," said a trader in Ho Chi Minh City. He added that global demand could rise until the end of the year.
A senior official of the Vietnam Food Association said the country's rice exports this year will exceed 6.5 million tons, but still fall from 7.1 million tons last year. Preliminary shipping data shows that 95,200 tons of rice will be loaded at Ho Chi Minh port between July 1 and 12, with most of the rice destined for Africa, Indonesia and the Philippines.
Thai rice, which is 5 per cent broken, was steady at $515 a tonne. A trader in Bangkok said prices were high as drought fears in Indonesia, the Philippines, Malaysia and some African countries prompted them to stock up.
Bangladesh Agriculture Ministry officials say rice production this summer will exceed the target of 21.5 million tons. The country has struggled to control domestic rice prices, which have continued to soar despite good production and reserves.
