Thai rice price surges amidst drought concerns
The world has been witnessing increases in the price of rice following drought concerns and India’s export ban, but it is Thailand’s rice that has seen the sharpest rise, according to the Food and Agriculture Organisation (FAO) of the United Nations.
In its monthly rice update issued on August 8, the FAO said that over the span of two weeks, quotations of Thai 100% B white rice jumped by US$38, raising the monthly average to $562 per tonne, the highest since February 2021.
The UN’s food agency also reported that its FAO All Rice Price Index rose by 2.8% in July to reach 129.7 points, up 19.7% year on year. This is the highest nominal value since September 2011.
The FAO said the main reasons for global rice price surging close to a 12-year high are the concerns over the potential impacts of El Niño on production, and the rain-induced interruptions and quality variability in Vietnam’s ongoing summer-autumn harvest.
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.
Another contributing factor is the fact that India, the world’s largest exporter, halted exports of all non-basmati rice from July to increase domestic rice stocks.
Oscar Tjakra, senior analyst at global food and agriculture bank Rabobank told CNBC on Wednesday that the FAO rice price index for August could climb higher than that of July.
He added that India’s non-basmati white rice export ban came at a time of seasonal low inventories in major global suppliers of rice, especially those in Asia. Prices could surge further if other countries followed suit in implementing export restrictions.
Earlier this month the Thai Rice Exporters Association (TREA) estimated that the impact of El Niño could bring the country’s rice output down by 1-2 million tonnes from the norm of 20 tonnes of milled rice per year.
TREA still maintained its export target of 8 million tonnes in 2023 after having achieved the 4.2 million tonnes milestone in the first six months.
