Rice prices in Asia jumped to the highest level in more than three years after top shipper India banned most of its exports, raising concerns about supplies of the food staple.
Thai 5% broken white rice, an Asian benchmark, soared to $572 a tonne, the most expensive since April 2020, according to data from the Thai Rice Exporters Association. That’s a 7% increase from two weeks ago.
Rice is vital to the diets of billions in Asia and Africa, and a surge in prices would add to inflationary pressures and boost the import bills for buyers.
India’s curbs, which apply to shipments of non-basmati white rice, are aimed at controlling domestic prices. The move comes as concerns escalate about the impact on farm supplies of the El Nino weather pattern, soaring temperatures in Europe, and Russian attacks against Ukrainian grain export facilities.
The situation could deteriorate. Thailand, the second-biggest rice exporter, faces widespread drought conditions and has asked growers to produce only one crop this year. The country is also assessing the level of its reserves.
Global rice importers are likely to seek direct deals with governments in exporting countries as India’s ban is squeezing supplies and igniting concerns over food security.
Buyers from Africa to Asia are likely to scramble for rice shipments as supplies tighten in coming months.
The ban will cut availability of the staple on world markets by about a fifth, traders and analysts said, and could lead to importers seeking more government-to-government deals to overcome shortages and tame spiralling prices.
“Export restrictions inherently reduce trust in the dependability of international trade,” said Shirley Mustafa, rice market analyst at the Food and Agriculture Organization (FAO).
“Thus, they could result in importing countries looking at government-to-government deals to ensure supplies.”
While announcing its export ban last week, India has left the door ajar for such deals, saying that it would consider meeting the requirements of countries in need of rice supplies.
Last September, India banned exports of broken rice in a bid to cool domestic prices, but since then official data shows the country approved sales of around one million tonnes of broken rice to Indonesia, Senegal, Gambia, Mali and Ethiopia.
“The current ban excludes government-to-government sales, and it remains within the government’s prerogative,” said BV Krishna Rao, president of the Rice Exporters Association.
“A decision will be made based on the needs of importing countries and the supply situation in the local market.”
Indonesia has signed an agreement with the Indian government to potentially import one million tonnes of rice if El Nino hits its domestic supplies.
India has ample stocks as of now to meet such requests, while Vietnam is due to start harvesting its main crop, analysts said.