August 05, 2015

05/08/2015: Global rice prices to surge by year-end as El Niño hits Asia

As the El Niño weather pattern begins to hit Asia, top rice producers there are experiencing below-average rainfall and grain stocks are already reaching multi-year lows. 

This is leading to expectations of a 10-20 percent increase in global rice prices. The dry weather and depleting rice stocks are impacting Asian nations differently. 

Lower output may be beneficial to the world’s number two rice exporter, Thailand, as it will allow the nation to sell down  an enormous stockpile that drove rice prices down to 7.5 year lows of US$367.5 per ton in June. 

In contrast, unseasonably dry weather during what should be the wet season has made rice transplanting difficult in India and has caused Vietnam to reduce this year’s output expectations. Combined rice exports from the three nations are expected to be down 6.2 percent this year to 27.2 million tonnes, according to the UN Food and Agriculture Organization (FAO). 

Due to these nations representing 68 percent of world rice trade, a drop in exports is expected to have a significant impact on price – 10 percent by years end, according to BV Krishna Rao, managing director of leading Indian rice shipper Pattabhi Agro Foods Pvt Ltd in a recent Reuters article - and as much as 20 percent of the dry weather remains throughout August, says another trader.

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The Global Miller
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