Not simply wheat, even world rice costs have been climbing for fifth month in a row

0
37

NEW DELHI – Global rice commodity prices rose for the fifth consecutive month in May, according to the latest Food and Agriculture Organization (FAO) price index, which has risen 3.5% since April. Most of the supply concerns stemmed from increased domestic demand for rice in Asia’s populous rice-exporting countries, as concerns over wheat supplies mounted after India banned exports of the grain last month.
Indian rice export prices continued to rise this week, helped by strong demand and concerns that the world’s largest exporter of the grain could cut supplies. Monsoon rains determine the size of India’s rice crop, and abundant rains this year are likely to help the country maintain its prominent position in the global rice trade.
India’s 5% broken parboiled rice sold at prices of $357-$362 per tonne this week, compared to $355-$360 the previous week.
“There is a huge demand for 100% broken rice as well as 5% broken rice. Traders are speculating that India may restrict exports,” said an exporter based in Kakinada, in the southern state of Andhra Pradesh.
India’s surprise wheat export ban has prompted rice traders to step up their purchases and place unusual orders for longer-term supplies.
However, trade and government sources said the country has no plans to curb exports of the grain as there are sufficient supplies and local rates are lower than government-set support prices.
Neighboring Bangladesh, meanwhile, will allow private traders to import rice as domestic prices rose more than 5% in a week despite good harvests and reserves. The government is also cracking down on stockpiling.
As measured by the FAO All Rice Price Index, global rice prices in May 2022 were 1.2 percent below the previous year’s level, but were 11.1 percent above their level at the end of 2021.
Price increases since December 2021 have been most notable for Japonica and Aromatic Rice, whose listings have risen 14.0 and 20.3 percent, respectively.
“Prospects of a prolonged drought severely restricting medium-grain plantings in California have been behind registered price gains in the Japonica segment, while revived demand in the Middle East related to production outages in the Basmati origins has led to fragrant prices. In the Indica segment, Thai and Vietnamese quotations have also risen, supported by an acceleration in demand and signs that local quotations are beginning to adjust to the higher production costs faced during the last crop cycle,” the FAO noted in its report.
Expectations of back-to-back production declines in the US and drought-related declines in rival Argentina and Brazil have also pushed global prices higher. In India, however, high availability has continued to weigh on whole grain prices despite sizeable local government purchases and strong exports. This, in turn, has made the prices of the most traded indica rice a bit more resilient to upward pressure.
At the country level, Bangladesh, China (Mainland), India, Indonesia, Malaysia and the Philippines are expected to end 2022 with positive production results, which should offset potential yield cuts due to reduced input use and/or changes in cultivar structure plantings in favor of fewer more elaborate varieties in Cambodia, Thailand and Vietnam.
Limited availability of water for irrigation is also clouding prospects for Iraq, the Islamic Republic of Iran and Pakistan, with production also falling in the Republic of Korea and Japan.
The biggest production losses in Asia are expected to be in Sri Lanka and Myanmar, where scarce and/or inaccessible raw materials amid broader economic constraints weigh heavily on production prospects this year
Although high input costs and water scarcity may prevent global rice production from increasing, the 2022 crop is expected to remain bountiful amid public efforts to help the sector address profitability challenges.
Data analyzed by the Food and Agriculture Organization shows that global rice production is set at 519.5 million tonnes in 2022, just 1.4 million tonnes below the record high set in 2021. Abundant exportable supplies — ensured by back-to-back bumper harvests — have helped the rice market weather much of the price hikes that have dominated most other food markets since mid-2020. Nevertheless, international rice prices have been rising since early 2022.
India, the world’s largest rice consumer after China, has a market share of more than 40% of the world rice trade. India exports rice to more than 150 countries and any reduction in its supplies would fuel food inflation. The grain is a staple food for more than 3 billion people, and when India banned its export in 2007, global prices shot to new highs. Any attempt to restrict exports from India would hit almost every rice-importing country, and it would also allow competing suppliers Thailand and Vietnam to raise prices, which are already more than 30% higher than Indian supplies.
With contributions from Reuters