Global rice cost poured close to increase and could increase even more

August 14, 2023: Rice prices increased to their highest because of India’s rice export prohibition and adverse weather conditions that could impact production, stated that the United Nations’ food agency.

The Food and Agriculture Organization, All Rice Price Index for July, increased by 2.8% to 129.7 points.

The figure is up 19.7% compared to a year ago and the most elevated nominal value since September 2011, data from FAO showed. The sharpest price increases came from Thailand.

“Concerns regarding the potential impacts of El Nino on production in some suppliers provided further underpinning to prices, as did rain-induced interruptions and quality variability in Vietnam’s ongoing summer-autumn harvest,” the report stated.

El Nino is a climate phenomenon marked by extreme temperatures and weather conditions that could interrupt lives and livelihoods.

India, the world’s ruling rice exporter, banned exports of non-basmati white rice on July 20, as the government seeks to keep a cap on soaring food prices at home and ensure there are enough supplies domestically “at reasonable prices.”

The country accounts for over 40% of the global rice trade. Even if it affects a portion of India’s overall rice shipments, FAO noted that India’s export restriction “raises substantial food security concerns for a large swathe of the world population.”

Rice prices are hovering at decade highs, with rough rice futures last trading at $16.02 per hundredweight (cwt).

And these prices could increase higher.

“We will probably see a higher FAO rice price index for August 2023 vs. July 2023,” Oscar Tjakra, senior analyst at international food and agriculture bank Rabobank, told.

He added that India’s non-basmati white rice export prohibition came during seasonal low inventories in major global rice suppliers, especially those in Asia.

Prices could surge further if other countries follow suit in implementing export restrictions.

“The prices can go even higher if importing countries try to stockpile rice for domestic food security, and shipping countries put export restrictions,” said Samarendu Mohanty, Asian regional director at International Potato Center.

El Nino could also exacerbate risks to global production in other major Asian rice producers such as Thailand, Pakistan, and Vietnam.

“For the following few months, international rice prices’ direction will be determined by the impact of El Nino,” Tjakra stated in an email.