The price of rice has hit 7-year highs because of the coronavirus pandemic. The reason for this is because the importers have started stockpiling the grain as shipments were curbed by exporters, reports CNBC.
The price of 5% broken white rice, which is the industry benchmark, increased 12% from March 25 to April 1, leading to the highest price since late April 2013, the Thai Rice Exporters Association said quoting Reuters data. Thailand is the world's second-largest exporter of rice after India.
The increase in price is because of the expectations of higher demand for Thai rice after the two top exporters India and Vietnam faced export disruptions due to the outbreak of the the novel coronavirus disease. Asia is the largest producer (90%) of rice in the world and consumes the same amount, the report added.
CNBC said rice traders in India have stopped signing new export contracts because of shortages of labout and logistical disruptions, Reuters reported, citing industry officials.
On the other hand, the Vietnamese government has put in restriction in export of the staple.
Rice prices started climbing in late 2019 due to a severe drought in Thailand and strong demand from Asian and African importers, which was way before the March spike.
Despite expectations of huge production this crop year and carry-over stocks of rice and wheat being at all-time highs, the rice price is the highest now, Samarendu Mohanty, Asia regional director at the Peru-based International Potato Centre said.
The report further said Thai Rice Exporters Association said that rice stock was ample, but acknowledged difficulties of labour shortages amid the pandemic after Cambodian labourers went home due to a nationwide lockdown. The impact would affect seasonal farming activities difficult and future harvests will be affected also, Mohanty in a blog post said. "Unlike other sectors, agriculture is heavily affected because of the lockdown,” he wrote. "If the planting season is missed, there will be no crop for the season or for the entire year,” Mohanty further added.
North America, Europe and China are now facing labour shortages and supply line disruptions for the spring planting, he added. "If the time slot is missed, they are done for the entire year."
The International Grain Council said in a recent report that buying of some commodities accelerated in recent weeks while logistical challenges were being reported as movement constraints and quarantine measures became widespread. It also acknowledged a sharp upturn in near-term demand, especially for rice and wheat-based foods. The Council’s forecasts for global rice supply and demand in 2019/20 are broadly unchanged m/m, with carryovers rising to a peak of 177m t on accumulation in China and India. Led by acreage increases in major exporters, world rice production in 2020/21 is projected to rise by 2% y/y, to a high of 509m t, with population growth supporting record uptake. Further gains in inventories are anticipated, mainly in key exporter and China. Trade is seen growing by 3% on bigger deliveries to Africa, with India the leading exporter.