How does El Nino affect global rice supply?

Compared to a month ago, the price of 5% broken rice increased by 15 USD to 498 USD/ton. This is the highest price in many years. Meanwhile, the price of the same grade of rice from Thailand decreased by about 10 USD to 494 USD/ton. In particular, Pakistani rice decreased by more than 20 USD to 503 USD/ton. Meanwhile, India still maintained the level of 453 USD/ton.

El Nino will reduce rice supply, push prices up

According to experts, rice export prices in some countries have decreased because they have previously increased too high, exceeding the tolerance of importers. The fact that rice prices have been pushed too high has also contributed to the market's sluggishness. In addition, importers are also keen to monitor new developments related to productivity and output from major suppliers in Asia.

In Thailand, the country's press cited research reports estimating that this year's rice output could fall by up to 6%, to 25.1 - 25.6 million tons due to the impact of the El Nino weather phenomenon. If this year's El Nino lasts longer, it will cause water levels in many reservoirs to drop severely, affecting both the main and second crop crops next year. In the first four months of this year, Thailand exported nearly 2.8 million tons of rice and set a target of 8 million tons for the whole year of 2023.

Meanwhile, the Vietnam Food Association (VFA) warned that in 2023, Vietnam will only be able to export about 6.3 million tons of rice, about 1 million tons lower than the set target. The reason is that there is no inventory source from the previous year to carry over.

The El Nino phenomenon has also caused a sharp increase in rice import demand in many markets such as the Philippines, China, Indonesia and Africa. According to the Food and Agriculture Organization of the United Nations (FAO), the world rice market may have a shortage of 8.7 million tons in the 2022/23 crop year (from May 2022 to May 2023). According to the latest forecast of the US Department of Agriculture , rice consumption in the 2023/24 crop year is forecast to reach a record 523 million tons, an increase of 1.5 million tons compared to the previous crop year (exceeding output by 2.5 million tons). Global ending inventories are forecast to decrease by 2.5 million tons to 166.7 million tons. This is also the third consecutive year that inventories have decreased and are at their lowest level since the 2017/18 crop year.

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