El Niño Hits Asia, Global Rice Prices to Surge by Year-End
As the El Niño weather pattern begins to hit Asia, top rice producers there are experiencing below-average rainfall and grain stocks are already reaching multi-year lows. This is leading to expectations of a 10-20% increase in global rice prices.
The dry weather and depleting rice stocks are impacting Asian nations differently. Lower output may be beneficial to the world’s number two rice exporter, Thailand, as it will allow the nation to sell down an enormous stockpile that drove rice prices down to 7.5 year lows of $367.5 per ton in June. In contrast, unseasonably dry weather during what should be the wet season has made rice transplanting difficult in India and has caused Vietnam to reduce this year’s output expectations.
Combined rice exports from the three nations are expected to be down 6.2% this year to 27.2 million tons, according to the U.N. Food and Agriculture Organization (FAO). Because these nations represent 68% of world rice trade, a drop in exports is expected to have a significant impact on price – 10% by years end, according to B.V. Krishna Rao, managing director of leading Indian rice shipper Pattabhi Agro Foods Pvt Ltd in a recent Reuters article – and as much as 20% if the dry weather remains throughout August, says another trader.