Rice prices in Asia have surged to the highest level in more than two years as importers build up stockpiles on fears that the onset of El Niño will parch plantations and damage crops.
A benchmark grade in the region, Thai white rice 5% broken, has climbed about 15% in the past four months to US$535 a tonne, the strongest since early March 2021, according to data from the Thai Rice Exporters Association.
According to Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, the country's industry has a great opportunity to export about 4 million to 5 million tonnes of rice in the second half of this year after shipping 4.1 million tonnes in the first half.
El Niño conditions have developed in the tropical Pacific for the first time in seven years, according to the World Meteorological Organization (WMO), threatening to bring drought to Southeast Asia. That comes just as three days of record global temperatures last week increased concerns over the pace of climate change.
While monsoon rains have brought relief to rice fields in parts of India, the top exporter, dry weather is threatening crops in No. 2 shipper Thailand, with the country facing widespread drought conditions from early 2024. The government has already asked farmers to restrict their planting to just one crop this year.
Importers have begun stockpiling rice at aggressive rates. Vietnam expects rice exports this year to climb to the highest in about a decade, with shipments surging to buyers in the Philippines, China and Indonesia.
“The large buying from Indonesia and Philippines has pushed the market higher,” said Jeremy Zwinger, founder and chief executive officer of research firm The Rice Trader. Still, “weakness will return in the new year or even the fourth quarter, unless politics or weather changes direction.”
Global rice supplies remain exceptionally large, Zwinger said. While the world’s year-ending stockpiles have dropped for two years, they are coming off a record high, according to data from the US Department of Agriculture.