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The US Department of Agriculture Lowers Its Forecast For the Volume of Global Rice Trade

Published Date: September 19, 2023

The global rice trade is facing significant changes as the Agriculture Ministry of the US recently lowered its forecast for the global rice trade for the years 2023 and 2024. 

This drastic revision is primarily attributed to India's sudden ban on further sales of non-basmati and non-parboiled milled rice, announced on July 20th. The ban started immediate panic buying by some importers and had a ripple effect on the rice trade market, leading to a rapid slowdown in Asia.

According to the Agriculture Ministry's report, global export expectations for 2024 have been reduced by a substantial 3.4 million tons, bringing the new estimate to 52.9 million tons. India, one of the world's largest rice exporters, has seen its export forecast drop by 4.0 million tons, down to 19.0 million tons.  This significant decline in India's exports is expected to have far-reaching consequences on the global rice trade dynamics. However, the report suggests that this drop in India's exports may be somewhat offset by rising export expectations in other major rice-producing countries such as Brazil, Pakistan, Russia, and Vietnam.

The report also highlighted that global rice exports, as of August, fell by 1.9 million tons to 53.8 million tons. India’s rice export expectations declined by 2 million tons to 20.5 million tons. Moreover, import forecasts for several major importers in Asia and sub-Saharan Africa have been revised downward for both 2023 and 2024. This shift in the global rice trade landscape is causing concerns among stakeholders and may lead to price volatility in the market.

Rice Prices at Record Highs

It is worth noting that rice prices reached their highest levels in August, according to data from the Food and Agriculture Organization (FAO). On August 30th, rice prices soared to $16.54, reflecting the volatility and uncertainty in the global rice market. Earlier in the month, on August 17th, raw rice futures had peaked at $15.98 per hundredweight (cwt), with each weight unit equivalent to 50.8023 kilograms. 

These price fluctuations highlight the sensitivity of the rice market to external factors, including export bans and supply disruptions.While these developments pose challenges to the global rice trade, there are underlying factors supporting its expansion. Increasing food consumption worldwide, rapid urbanisation, and the adoption of modern farming techniques, with unregulated government policies, are major causes of rice disruptions.

 As a result, the global "IMRC" group, specialising in grain and commodity research, reported that the size of the global rice market reached an impressive $294.8 billion in 2022. The group anticipates the market size to further grow to $345.8 billion by 2028, driven by a compound annual growth rate of 2.7% during the period 2023-2028.

The Bottom Line

In conclusion, the global rice trade is currently navigating choppy waters, with India's export ban causing significant disruptions. However, rice producers and governments will need to closely monitor market dynamics and adapt to changing conditions to navigate these uncertain times in the global rice trade.

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