Summary

• Buyers, sellers awaiting market reaction after India’s ban
• Rice price rally comes after gains in wheat, sparks food inflation

Introduction

Asian rice trade paused on Friday to digest the previous day’s ban by India, the world’s biggest supplier, of a major share of its rice exports. This decision is expected to lead to substantial price increases in the coming days, with traders predicting a minimum gain of around $50 per metric ton and potentially even higher.

Reasons for the Price Increase

India, which accounts for 40% of world rice exports, halted its largest rice export category to reduce domestic prices. Erratic weather in recent weeks has threatened production and led to multi-year highs in rice prices. Additionally, a surge in global wheat prices due to Russian attacks on Ukrainian ports has added to concerns over food inflation, further impacting rice prices.

Market Reaction

Traders are closely watching the market to see how much prices will rise in response to India’s ban. Both sellers and buyers are cautious, waiting to assess the situation before making any moves. The ban has taken out significant volumes of rice from the market, putting upward pressure on prices.

Projections for Price Increase

The ban is likely to lead to a similar gain in rice prices in other exporting countries as well. Suppliers in Thailand, the world’s second biggest exporter, are anticipating prices as high as $700-$800 per metric ton. In Vietnam, prices for 5% broken rice have already reached their highest level since 2011.

Impact on Global Rice Consumption

Rice is a staple food for over 3 billion people worldwide, and almost 90% of rice production occurs in Asia. However, the dry El Nino weather pattern in the region is likely to curb supplies, potentially exacerbating the rise in prices.

Conclusion

The ban on rice exports by India, along with other global factors, is expected to drive rice prices even higher in the export market. This situation poses challenges for buyers and sellers who are closely monitoring the market to make informed decisions. As the trade remains at a standstill, the impact on food inflation and global rice consumption remains a concern.