Rice prices soar on back of India’s export ban
The Thai Rice Exporters Association (TREA) on Tuesday predicted an uncertain situation in the second half of the year after India, the world’s largest exporter, halted exports of all non-basmati rice from July to increase their domestic rice stocks.
According to TREA honorary president Chukiat Opaswong, several rice-producing countries are preparing for the drought induced by the El Niño phenomenon expected this year and in 2024.
El Niño is triggered by a rise in surface temperatures of the eastern Pacific Ocean, leading to a phase of planet warming. The natural phenomenon usually occurs every two to seven years and brings reduced rainfall in Southeast Asia and southern Australia.
Chukiat said India’s policy has resulted in the price of 5% white rice in the global market jumping by US$50 per tonne, in anticipation of a global shortage of rice supply.
“In Thailand, most millers have yet to start selling their rice, and this means exporters are unable to set appropriate prices for foreign markets,” he said. “This period is therefore a vacuum for rice exporters, as everyone is waiting on the global situation to unfold.”
Chukiat pointed out that Vietnam is currently selling white rice at US$600 per tonne following India’s implementation of its export ban. This price is significantly higher than the price of Thai white rice on the global market before July, which was a little over US$500 per tonne.
Chukiat added that the uncertainty could be made worse by India’s decision to sell rice to certain countries on a quota basis, in a bid to preserve those countries’ food stability.
“So far, Indonesia and the Philippines have applied for a quota to buy about 1 million tonnes each from India,” he said. “If India were to sell to them, Thai exporters will have trouble selling our rice to these countries.”
Chukiat said that apart from monitoring India’s policy, Thai exporters must also follow up on the rain situation and plan accordingly, especially during the harvesting season in December.
He added that in normal conditions, Thailand produces around 20 tonnes of milled rice per year, about 12 tonnes of which will be for domestic consumption and some 7-8 million tonnes earmarked for export.
“The impact of El Niño could bring the output down by 1-2 million tonnes, which will make the price of rice for export more expensive,” he said. “However, a complete ban on exports due to domestic shortages is highly unlikely for Thailand.”
The TREA has set an export target of 8 million tonnes in 2023 and has achieved the 4.2 million tonnes milestone in the first six months.
“A bumpy road could await rice exports in the second half of the year, so we need to monitor the situation closely,” said Chukiat “The TREA will evaluate the situation again in the next 1-2 months.”
