Brace for global rice shortage in 2023, Fitch advises consumers

Rice production has been falling from the US to China to the European Union. This has resulted in the prices going up for over 3.5 billion people across the planet, particularly the Asia-Pacific region that consumes almost 90 percent of the rice in the world.

The rice market globally is set to log its largest shortfall in 20 years in 2023, Fitch Solutions stated.

A deficit of this magnitude for one of the most cultivated grains in the world would hurt major importers, CNBC reported, citing analysts.

Charls Hard, the commodities analyst at Fitch Solutions, told CNBC in an interview that at the global level, the most evident impact of the global rice deficit has been, and still is, the decade-high rice prices.

A recent Fitch Solutions Country Risk and Industry Research stated that rice prices are likely to remain notched around the present highs till 2024.

CNBC reported, citing the report, that the price of rice averaged $17.30 per cwt through 2023 YTD and would only ease to %14.50 per cwt in 2024. Cwt is a unit that measures certain commodities like rice.

“Given that rice is the staple food commodity across multiple markets in Asia, prices are a major determinant of food price inflation and food security, particularly for the poorest households,” Hart told CNBC.

The report has estimated that the global shortfall of rice for 2022/23 would come in at 8.7 million tonne, CNBC reported.

Hart said the same would mar the largest global rice deficit since 2003/04, when the rice markets globally generated a deficit of 18.6 million tonne.

India, which is the world’s top exporter of rice, has imposed curbs on its broken rice exports in the backdrop of rising inflation.

Over the last three years, factors such as the COVID-19 pandemic, Russia-Ukraine War, sanctions on Russia, China’s zero-COVID policy, have resulted in the demand-supply mismatch, resulting in rising prices. Central banks across the world, following in the US Fed’s footsteps, have been increasing their lending rates to fight the rising inflation. Now the world is looking at a possible global slowdown and a possible recession.

Due to all these factors as well as concerns over production because of below-average monsoon rainfall in key growing states, India too in September 2022 banned issued a ban on broken rice exports and imposed 20 percent duty on various other grades.

Despite these restrictions, India’s rice exports grew 3.5 percent to a record 22.26 million tonne in 2022, which was more than the combined shipments of the next four largest exporters — Thailand, Vietnam, Pakistan and the United States.

Satyam Balajee Rice Industries told CNBC-TV18 that rice cultivation figures have been good and he does not see a concern with production cut. He says rice prices at the moment are under control. He added that if Thailand and Vietnam have cultivation concerns then production may be impacted. He added that the company is exporting 5-10 vessels compared to 15-20 vessels last year. Talking about prices, he expects stable bearish rice prices in the next two to three months.

Credit: CNBC

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