Rice prices surge to 15-year high amid demand and El Niño concerns
Rice prices have surged to a 15-year high amid growing concerns about the impact of increased demand and the effects of El Niño on supplies. The grain, a dietary staple for billions of people in Asia and Africa, saw its cost rise 2.5% last week, reaching US$650 a tonne, the highest point since October 2008. This information, provided by the Thai Rice Exporters Association, reflects the price of Thai white rice at 5%, the standard in Asia.
The cost of rice last reached this level in early August, prompted by widespread export restrictions from India, the leading exporter, and dry weather conditions that threatened the Thai crop. Prices then dropped during September and October but have been on a rapid rise again throughout November. This trend could keep food inflation high in the forthcoming months, particularly in countries heavily dependent on rice, like the Philippines.
India’s Prime Minister, Narendra Modi, is similarly worried about the accelerating food inflation ahead of the general elections next year. Despite export restrictions, a successful harvest, and ample state reserves, rice prices continue to rise. Over the past two years, the cost of this staple has increased about 12% annually, leading officials to appeal to millers to decrease retail prices, reported Bangkok Post.
Indonesia is also taking action to address its rice needs. Srettha Thavisin, Thailand’s Prime Minister and Finance Minister, stated that Indonesia plans to purchase 2 million tonnes of rice from Thailand by the end of next year. Following this announcement, local millers postponed sales in anticipation of higher prices. Chookiat Ophaswongse, an honorary president of the Thai Rice Exporters Association, attributes this to the strong Thai currency, which also influences the price rise.
However, Chookiat believes the potential for a significant market increase may be limited by upcoming supplies from Vietnam and Thailand. He notes that Thailand’s ample water reserves ensure a good second crop and high prices will likely motivate farmers to expand their planting. Nevertheless, Chookiat predicts that prices will remain high early next year due to ongoing food security concerns and India’s export ban.
The rising cost of rice stands in marked contrast to other staple grains like wheat and corn. The price of Thai white rice has risen 36% in the past year, whereas wheat futures in Chicago have dropped 20%, heading for their first decrease in seven years. Corn futures have fallen about 30% this year.
