Filenews 19 April 2023
"SOS" emits the global rice market as from China to the USA and the European Union, rice production is declining and driving up prices for more than 3.5 billion consumers around the world, especially in the Asia-Pacific region where 90% of world production is consumed.
The global rice market is set to post its biggest deficit in two decades in 2023, according to Fitch Solutions.
"Globally, the most obvious impact of the global rice deficit has been, and still is, high rice prices for a decade," said Charles Hart, commodities analyst at Fitch Solutions. Rice prices are expected to remain high through 2024, according to a report by Fitch Solutions Country Risk & Industry Research.
The price of rice averaged $17.30 per cwt (unit of measurement of rice, about 50 kilograms) by 2023 and will only drop to $14.50 per cwt in 2024.
"Since rice is the staple food commodity in many markets in Asia, prices are an important determinant of food price inflation and food security, particularly for poorer households," Hart said.
The global deficit for 2022-2023 will amount to 8.7 million tonnes, according to the report's forecast. This is the largest global rice deficit since 2003-2004, when global rice markets created a deficit of 18.6 million tonnes, Hart said.
As stated in the report, the shortage of rice is due both to the war in Ukraine that has been going on for a year and to prolonged bad weather in China and Pakistan. In the second half of last year, farmland in the world's largest rice producer, China, was plagued by heavy summer rains and flooding. Similarly, Pakistan – which accounts for 7.6% of global rice trade – saw annual production plunge by 31% year-on-year due to severe flooding last year.
At the same time, rice became an increasingly attractive alternative after the price of other major grains spiked since Russia's invasion of Ukraine in February 2022, which boosted demand.
"The global rice production deficit situation will increase rice import costs for major rice importers such as Indonesia, the Philippines, Malaysia and African countries in 2023," one analyst told CNBC.
Many countries will also be forced to withdraw their domestic reserves, and the countries most affected by the deficit will be those already suffering from high domestic food price inflation, such as Pakistan, Turkey, Syria and some African countries.
However, the shortfall in rice production is partly due to an annual deterioration in the harvest this year and will soon be a thing of the past. Fitch Solutions estimates that the global rice market will return to a "roughly balanced position in 2023-24."
