Rice prices scale fresh 15-year high as supply risks linger

RICE prices reached a fresh 15-year high on mounting concerns that increased demand and the impact of El Nino will further tighten supplies of the grain that is a staple for billions across Asia and Africa.

Thai white rice 5 per cent broken, an Asian benchmark, climbed 2.5 per cent from the prior week to US$650 a tonnes on Wednesday (Dec 20), according to the Thai Rice Exporters Association. That’s the highest level since October 2008.

Prices most recently rallied to that milestone in early August in the wake of sweeping export curbs from top shipper India and as dry weather threatened the Thai crop. After retreating for most of September and October, price gains quickened in November. This could keep food inflation elevated in the coming months, especially in rice-reliant countries such as the Philippines.

India’s Prime Minister Narendra Modi is also concerned about accelerating food inflation before general elections next year. The cost of rice is increasing despite tight export restrictions, a good harvest and ample state stockpiles, according to the food ministry. The staple has risen about 12 per cent annually in the past two years, and officials have asked millers to cut retail prices.

In a further sign of the strength of demand for Thai rice, Prime Minister Srettha Thavisin said this week Indonesia plans to buy two million tonnes from the country by the end of next year. That comes just as El Nino, which parches crops across Asia, is expected to cut Thai paddy output by about 6 per cent in 2023 to 2024.

The increase in rice costs this year is in stark contrast to other staples – wheat and corn. The Thai white rice price is up 36 per cent in the past year, while wheat futures in Chicago are down 20 per cent and heading for the first decline in seven years. Corn futures have lost about 30 per cent this year. BLOOMBERG