The rice market is set to remain tight at the start of the year on India’s ongoing export restrictions and an expected boost from festival demand, providing impetus for elevated prices to climb even higher.

The grain is vital to the diets of billions and further price gains would stretch household budgets. Thai white rice 5% broken — an Asian benchmark — rallied to a fresh 15-year high at the end of last year of $659 a ton.

“We know rice markets will remain tight for the foreseeable future, largely due to India’s export ban,” according to Peter Clubb, a commodities market analyst at the International Grains Council in London. “We also have Eid coming up in April, and the period before Eid tends to see good demand from markets with significant Muslim populations in Asia and Africa.”

Top shipper India is expected to keep its export restrictions in place until at least a general election in April or May, as Prime Minister Narendra Modi seeks to contain local prices before voters head to the polls. The onset of El Niño and its potential impact on key growing areas has added to supply concerns.

Nations across Asia and Africa have scrambled to secure supply since India ramped up its restrictions in July. Rice inflation in the Philippines has surged, while Indonesia has asked its military to help farmers boost output. The nation is a major importer and is gearing up for a presidential election next month.

Still, prices are unlikely to revisit the 2008 record above $1,000 a ton, which coincided with broader export bans. Farmers in Vietnam’s Mekong Delta could start harvesting their new crop this month, alleviating some supply concerns. The winter-spring harvest typically yields the nation’s biggest crop.

Thailand’s rice exporters association, which sets Thai white 5% broken prices, also expects the nation’s exports to drop this year as demand eases, most notably from Indonesia following its election. Thailand is the world’s second-biggest exporter of the grain, while Vietnam is the third largest.

Published Date: January 10, 2024