Global rice prices near 2011 peak

The Food and Agriculture Organization of the United Nations (FAO) said its rice price index for July rose 2.8 percent to 129.7 points, up 19.7 percent from a year earlier and the highest nominal value since September 2011.

Concerns about the potential impact of El Nino on production in some major suppliers have pushed rice prices higher, along with supply disruptions due to floods and poor harvest quality, the FAO report said.

On July 20, India, the world's top rice exporter, banned exports of non-basmati white rice in an effort to curb rising food prices and "ensure adequate domestic supply at reasonable prices."

India accounts for more than 40% of the global rice trade. However, retail prices in the country have risen 3% after floods damaged crops. Meanwhile, in Thailand, the world’s second-largest rice exporter, farmers are planting less to save water due to low rainfall.

“We trade about 55 million tonnes, so 10 million tonnes is a significant number in terms of global trade. So the decision to ban rice exports will have a significant impact. Imagine if you take 10 million tonnes out of the market, while the demand remains the same, the price of rice will increase and in fact the price of rice has increased by 15 to 20%,” said Samarendu Mohanty, an agriculture expert in India .

In the trading markets, rice prices are at a decade high, with rough rice futures last trading at $16.02 per quintal (cwt).

Prices could rise further in August, as the export bans come at a time of seasonally low inventories in major global rice suppliers, particularly in Asia, said analyst Kona Haque, head of research at British agricultural commodities trader ED&F Man.

“Global rice prices are at the highest levels we have seen in over a decade,” said Kona Haque, an expert at the World Bank. “Rice is the staple food for at least half the world’s population, meaning that many people’s disposable incomes will suddenly triple what they used to pay. Not many countries have the capacity to produce rice, and most of the Southeast Asian countries that produce rice are seeing declining yields. So I think it’s not going to be an easy situation.”

El Nino could exacerbate risks for major rice exporters, with a scientific study finding that rice is the crop most vulnerable to, and most likely to fail, the weather phenomenon.

Thu Hoai (VOV1)