Prices of rice expected to increase

India's recent curbs on rice exports could trigger a rally in global prices after more than a decade of stability, traders said, as New Delhi's protectionist move coincides with falling output in other major producers and rising global demand.Uneven monsoon rains hit rice planting in India, prompting the export restrictions in September, and floods have cut output in Pakistan even as consumption has grown in top importers such as Bangladesh and the Philippines. That's why forecasters are saying global demand will outstrip production in 2022/23.This is bad for Asian and African countries that use rice as a staple, some of which import as much as 60% of their supply.Since India - the world's biggest rice exporter - banned exports of broken rice and slapped a 20% export tax on some non-basmati varieties, global rice prices have jumped more than 10%. Last month, the Food and Agriculture Organization's global rice price index rose 2.2% to hit an 18-month high."The international market has gone up and it will go up further," said Nitin Gupta, vice president for Olam India's rice business.Governments worldwide had already been struggling to tame food inflation because of COVID-19 disruptions to production and supply chains, and then Russia's invasion of Ukraine removed millions of tonnes of foodstuffs from global markets, pushing inflation to a record earlier this year.Still, before India implemented its export curbs a few months ago, industry and government officials in Asia were saying rice prices would hold steady due to ample stocks.Rice, unlike wheat, was insulated from the Russia-Ukraine war as neither country is a big producer, and supplies of the grain had remained relatively steady during the COVID-related disruptions for other foodstuffs.Now, however, top exporters Thailand and Vietnam sit on insufficient inventories to make up for India's curb on exports and widespread output losses. Global rice inventories could fall to their lowest in at least five years in 2023, three global traders said, citing internal assessments."Since India cornered 40% of the global trade, it's not easy for others to replace falling Indian shipments when demand is rising from leading importers," Gupta said.The US Agriculture Department (USDA) has cut its global rice production estimate for 2022/23 to 508 million tonnes, the lowest in four years. Just a month ago, the agency was expecting output for the year at 512 million tonnes.Some top global trading houses, though, expect a sharper fall to around 500 million tonnes because of the extreme weather conditions that threaten crop yields in countries such as China, India, Bangladesh and Pakistan.-Fin24

Prices of rice expected to increase

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