Rice harvests are plagued by bad weather in the largest producing countries, Fitch Solutions says.
Countries around the world are facing the biggest shortage of rice in two decades, CNBC reported on Wednesday, citing a report by Fitch Solutions. According to the agency’s estimates, the 2022-23 crop year will see an 8.7-million-ton shortage in the global supply, the largest shortfall since 2003-04, when it was 18.6 million tons.
Data from Statista.com shows that global rice production last year was 502.9 million tons, making it the third-most produced grain after corn and wheat. However, production has been dropping in recent months as a result of bad weather in rice-producing countries like China and Pakistan, the report notes.
China, the largest global producer, which supplied over 148 million metric tons of milled rice to the market in 2021-22, suffered from heavy rains and flooding in the second half of last year, which affected much of the country’s rice farmland. Currently, the country is “experiencing the highest level of drought in its rice growing regions in over two decades.” Both situations could be dire for the vulnerable crop, analysts say.
Pakistan, with nearly 8% of global rice trade, also faced severe flooding this year, which saw its annual production drop 31%.
Furthermore, forecasts claim that India, the world’s second-largest rice producer, may suffer from intense heat in the second and third quarters of 2023, which could also endanger its crop yield. European rice-growing countries such as France, Germany, and the UK have also been suffering from the highest level of drought in 20 years, which may further endanger this year’s supply, analysts say.
Due to the shortages, analysts expect rice prices to remain around their current highs – from $16-18 per cwt (50.8kg), which is more than double that of 2020 – for the remainder of the year. Analysts note that, apart from supply constraints, rice prices are also affected by Russia’s military operation in Ukraine. The conflict has jeopardized both Ukrainian and Russian grain supplies to the global market, driving up wheat prices, which has made rice an increasingly attractive alternative and boosted demand.
Analysts warn that, “given that rice is the staple food commodity across multiple markets,” its price is expected to drive up global food price inflation.
Fitch Solutions estimates, however, that the global rice market may return to “an almost balanced position in 2023/24” and a surplus in 2024-25, largely due to an expected surge in production in India.