Rice is the primary staple for over 3 billion people around the world. From kheers to biryani, a wide range of cuisines are made out of it and hence the demand for rice remains strong all year round.
This is also the reason why rice is regarded as a buyers’ market. Buyers from different parts of the world showcase demand which in turn determine the export price of rice from leading rice exporters of the world. However, that might change this year as per the present market conditions.
Global rice prices are already at an 11 year high and prices might rise further as leading rice exporter, India looks to boost payments to farmers and alternatives get costlier for poor Asian and African nations amid speculations of El Nino effect.
India Moves to Boost Payments to Farmers
Located in Asia, India is the leading rice exporter in the world. The Asian nation accounts for over 40 per cent of the global rice trade and last year itself it shipped 56 million tonnes of rice to countries around the world.
India holds such a mammoth share in the global rice trade that any disruptions in the rice supply from the Asian nation is bound to fuel up prices of the staple around the world and this seems to be the case this time around.
Following a 7 per cent rise in prices paid by the GOI to farmers for new season, export price of Indian rice has jumped by 9 per cent to stand at five-year high.
The move by the GOI to raise minimum support price have also led to rise in export prices of rice from other strategic suppliers, according to B.V. Krishna Rao, president of Rice Exporters Association (REA)
A look at the figures reveal export prices of rice from Thailand and Vietnam have witnessed a significant rise to reach two year high.
El Nino Also A Concern
Despite U.S. Department of Agriculture (USDA)’s forecast of a near-record rice output in top six global rice producers, namely Bangladesh, China, India, Indonesia, Thailand and Vietnam, global trading houses believe the export prices to rise owing to El Nino weather pattern.
Mr. Nitin Gupta, Vice president of Olam India’s rice business commented that the impact of El Nino is not restricted to any single country. It affects the output in almost all producing countries, Mr. Nitin Gupta said on speculations of strained supplies and rising rice export price due to El Nino phenomenon. Market participants believe that prices could rise a fifth or more if El Nino leads to drop in yields.
Thailand, the second leading rice exporter has already urged farmers to plant one rice crop after reduced rainfall in May. On similar lines, weather in India and China have not been conducive for rice cultivation. India might also curb export of rice to tame food inflation which would choke the rice supply and lead to surge in global rice price.
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