Rice prices reached a fresh 15-year high on mounting concerns that increased demand and the impact of El Niño will further tighten supplies of the grain that is a staple for billions across Asia and Africa.

Thai white rice 5 percent broken, an Asian benchmark, climbed 2.5 percent from the prior week to $650 a ton on Wednesday, according to the Thai Rice Exporters Association. That’s the highest level since October 2008.

Prices most recently rallied to that milestone in early August in the wake of sweeping export curbs from top shipper India and as dry weather threatened the Thai crop. After retreating for most of September and October, price gains quickened in November. This could keep food inflation elevated in the coming months, especially in rice-reliant countries like the Philippines.

India’s Prime Minister Narendra Modi is also concerned about accelerating food inflation before general elections next year. The cost of rice is increasing despite export restrictions, a good harvest and ample state stockpiles, according to the food ministry. The staple has risen about 12 percent annually in the past two years, and officials have asked millers to cut retail prices.

Thai Prime Minister Srettha Thavisin said this week Indonesia plans to buy 2 million tons from the country by the end of next year. Local millers delayed sales after the news on hopes of higher prices, said Chookiat Ophaswongse, an honorary president of the Thai Rice Exporters Association, adding that the strong Thai currency also contributed to rising prices.

Looming supplies from Vietnam and Thailand may limit the potential for any sharp upside in the market, Chookiat said, noting Thailand has sufficient water reserves to guarantee a good second crop. High prices will also encourage farmers to expand planting, he said by phone on Thursday.

“Still, we expect the price to remain at pretty high levels early next year on lingering food security concerns and India’s ban,” Chookiat said.

The increase in the cost of the grain is in stark contrast to other staples—wheat and corn. The Thai white rice price is up 36 percent in the past year, while wheat futures in Chicago are down 20 percent and heading for the first decline in seven years. Corn futures have lost about 30 percent this year.

Published Date: December 25, 2023