Rice price shoots up as demand spikes during pandemic
The global Covid-19 outbreak combined with ongoing drought in major rice-growing countries has triggered fear of possible food shortages, said Somporn Isvilanonda, senior fellow at the Knowledge Network Institute of Thailand.
In response, countries around the globe are increasing their orders from established rice suppliers such as India, Thailand, Vietnam and Pakistan, as well as from emerging rice growers like Myanmar and Cambodia.
In Thailand, exports have fallen as demand for domestic rice rises due to food hoarding during the lockdown, which has pushed up the price.
The global price of good quality broken rice (5% and 25%) had been on a downward trend before the outbreak since the market was being flooded by India, Thailand and Vietnam, as well as new production sources such as Myanmar and Cambodia. The price of good quality rice from Thailand, meanwhile, is higher than its competitors because yields have been hit by ongoing drought that began in the second season of 2018. The baht’s strengthening against the dollar and other currencies has also hit competitiveness of Thai rice exports.
The Covid-19 outbreak has upset the balance of demand and supply in the global rice market, as importing countries seek more rice to build their reserves for emergencies. As a result, rice prices have been rising since January. The price has risen sharply in March, after Vietnam placed restrictions on rice exporters and India maintained strict lockdown measures resulting in deadlock of the rice export supply chain. In Thailand, measures to restrict movement have affected some supply chains for rice exports but not to the point where it is no longer fulfilling orders from exporters. However, the supply of Thai rice products in the market has decreased, which has lifted global prices.
According to the Thai Rice Exporters Association, prices for 5% and 25% Thai white rice rose from US$491 and $471 per tonne on March 11, to $579 and $547 per tonne on April 8 – increases of 14.17 percent and 14.92 percent respectively.
Prices for other types of rice also increased significantly with the exception of jasmine rice, a high-priced premium product. The price of lower-quality fragrant rice has meanwhile risen by almost 20 percent as consumers switch varieties amid the Covid-19 outbreak.
"Rice prices will continue to swing in an upward trend for the next two months but the situation is not so serious that it will result in a crisis of high-priced rice as in the past, since there has been an excess of supply of rice for exports in the past decade. In addition, when rice prices rise, China, which has the world's largest stockpile, will release stocks to help ease pressure in the market as a whole," said Somporn.
