The rice market is set to remain tight at the start of the year on India’s ongoing export restrictions and an expected boost from festival demand, providing impetus for elevated prices to climb even higher.
The grain is vital to the diets of billions and further price gains would stretch household budgets. Thai white rice 5% broken — an Asian benchmark — eased to $646 a tonne on Wednesday, slipping for the first time since early December, but it remains near a 15-year high.
“We know rice markets will remain tight for the foreseeable future, largely due to India’s export ban,” according to Peter Clubb, a commodities market analyst at the International Grains Council in London.
“We also have Eid coming up in April, and the period before Eid tends to see good demand from markets with significant Muslim populations in Asia and Africa.”
Top exporter India is expected to keep its restrictions in place until at least the general election in April or May, as Prime Minister Narendra Modi seeks to contain local prices before voters head to the polls. The onset of El Niño and its potential impact on key growing areas has added to supply concerns.
Nations across Asia and Africa have scrambled to secure supply since India ramped up its restrictions in July. Rice inflation in the Philippines has surged, while Indonesia has asked its military to help farmers boost output. The country is a major importer and is gearing up for a presidential election next month.
Still, prices are unlikely to revisit the 2008 record above $1,000 a tonne, which coincided with broader export bans. Farmers in Vietnam’s Mekong Delta could start harvesting their new crop this month, alleviating some supply concerns. The winter-spring harvest typically yields the country’s biggest crop.
The Thai Rice Exporters Association, which sets Thai white 5% broken price, also expects the country’s exports to drop this year as demand eases, most notably from Indonesia following its election.
Thai rice exports last year were estimated at 8.7 to 8.8 million tonnes, up sharply from 7.7 million tonnes the year before, driven by high demand from Indonesia.
The improved performance helped Thailand to move back into second place, ahead of Vietnam, among global rice exporters.