The global rice market could become even more tense as China grapples with heavy rain and floods, according to Fitch Ratings.
A recent report by Fitch Ratings warns that heavy rain in Northeast China could reduce output and "potentially exert upward pressure on global rice prices, which are already high." China is the world's largest rice producer. Flood alerts have been raised for three provinces that account for 23% of the country's rice production, including Inner Mongolia, Jilin and Heilongjiang
Many important cereal-producing areas in the three provinces have been affected by heavy rain and the aftermath of Typhoon Doksuri. There's a possibility that this region will have to deal with another flood as Typhoon Khanun moves northward.
Flooded villages in Zhangjiakou, Hebei Province, on August 1st. Photo: Caixin
The world's second-largest economy has been devastated by floods in recent weeks. Typhoon Doksuri is one of the largest storms to hit northern China in years. The capital, Beijing, experienced its heaviest rainfall in 140 years. However, specific damage to cereal production has yet to be assessed.
According to a U.S. credit rating agency, there is a possibility that domestic cereal prices in China will rise, and the country will need to import more in the latter half of 2023 to offset production losses. Specifically, if there's a shortage in rice harvest, China might need to increase imports, potentially driving global rice prices even higher. China's rice import quota for this year is 7.2 million tons, but this is not a fixed threshold and could be adjusted to stabilize domestic prices.
Global Rice Price Index Months in the Period 2019-2023
Source: FAO
Global rice prices have risen to their highest level in nearly 12 years, according to the Food and Agriculture Organization (FAO) Rice Price Index. This index reached 129.7 points as of July, compared to 108.4 points in the same period of 2022. Used to monitor fluctuations in rice prices in the international market, the FAO calculates the index by taking the average price of key rice exports from various countries and then converting it into points based on a baseline of 100 points, representing the average rice price during the 2014-2016 period.
Rough rice futures prices are also at their highest level in a decade, reaching $15.98 per hundredweight (CWT), equivalent to 45.36 kg. Previously, analysts had predicted that rice prices would continue to rise, especially after India banned white rice exports last month and Thailand urged farmers to cultivate less rice to conserve water due to low rainfall.
According to vnexpress.net