El Niño phenomenon sends rice prices soaring
The price of Asian rice has surged to its highest level in over two years due to increased rice hoarding by rice importers who are worried that the El Niño weather phenomenon will result in drought and crop damage.
Thailand, the world's second-largest rice exporter, may face significant consequences.
According to data from the Thai Rice Exporters Association, the price of Thai rice has increased by 15% in the past four months, reaching 535 US dollars per tonne, the highest since March 2021.
While monsoon rains have helped alleviate the rice crop distress in India, a leading rice exporter, dry and drought-like conditions are posing a threat to the agricultural sector in Thailand, the second-largest rice exporter. Various regions of the country are also likely to experience drought conditions starting from early 2024 and the Thai government has advised rice farmers to limit their cultivation to only one crop cycle this year.
According to Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, the impact of drought and dry conditions due to the El Niño phenomenon will be felt from September to October 2023, resulting in continuous rice hoarding. The effects may extend into the next year.
The World Meteorological Organisation reports that El Niño has occurred for the first time in seven years in the Pacific warm zone, causing dry and drought conditions in Southeast Asia.
As rice-importing countries have started stockpiling rice at high rates, Vietnam predicts that rice exports may reach the highest level in the past decade. Rice exports to countries such as the Philippines, China, and Indonesia have increased significantly.
Jeremy Zinger, the founder and CEO of research firm The Rice Trader, suggests that the impact of El Niño will occur in the fourth quarter to early next year.
According to the US Department of Agriculture, global rice stocks have decreased over the past two years, but seem to be increasing this year.
The Chinese Meteorological Administration reports that several areas in southern China may experience a heatwave in the coming days, and some regions in the Hainan and Jiangxi provinces, major rice-growing areas in China, may see temperatures of 40 degrees Celsius. This poses a risk of premature rice ripening.
