On Thursday, India stopped the export of white rice other than basmati to prevent a sharp rise in prices in their domestic market. This ban affects about a quarter of India’s total rice exports. India is the world’s largest rice exporter, accounting for over 40% of global supplies. Rice prices in India have risen by more than 11% over the past year due to heavy rains damaging crops. As a result, rice trading in Asia halted as traders evaluated the impact of the export restrictions from India.
Rice is a staple food for over three billion people, and nearly 90% of this water-intensive crop is grown in Asia. However, the dry weather and El Niño effect are expected to limit supplies. According to Reuters, citing three traders, rice prices are expected to rise significantly over the next few days.
“Rice prices on the export market will continue to rise. We expect a minimum increase of around $50 per tonne, but it could be $100 or more,” said an international trader from Singapore. “At this point, everyone – sellers and buyers – is waiting to see how much the market will increase,” he added.
Vietnamese rice with five percent broken grain was offered at $515 to $525 per tonne, while Indian parboiled rice with five percent damaged grain this week was trading near a five-year high at $421 to $428 per tonne.
The ban on non-basmati rice exports from India is expected to hit Bangladesh and Nepal the most because both countries are major export destinations. “Bangladesh, China, Benin, and Nepal import significant Indian rice. African countries also import large amounts of Indian rice,” according to Gro Intelligence analysts. Affected importers may resort to alternative suppliers in the region, such as Thailand and Vietnam.
In Thailand, the world’s second-largest rice exporter, suppliers wait to see how prices develop before signing new contracts. “Exporters will not want to sell because they do not know what prices to quote,” said the Thai Rice Exporters Association chairman to Reuters. “Some of them believe prices could reach $700 to $800 per tonne,” he added.
While rice prices remain stable on the global market, the coming months may bring significant fluctuations. In addition to the worldwide supply reduction, which has a favorable effect on price growth, speculators will also participate in price formation, and analysts expect their most considerable activity and effort to raise prices. The rising cost of harvesting over the past year is an additional factor that may push rice prices higher.
The food supply chain is already under significant pressure. Since last summer, Russia’s exit from the so-called grain agreements, which allowed Ukrainian agricultural products to be exported from Black Sea ports, has increased wheat prices on the global market. This week, they rose over 10%, marking their most significant weekly increase over 16 months.
The situation with Indian rice exports will continue to be monitored closely, as the impact will be felt globally.