Rice prices peak in 7 years as coronavirus triggers storage

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Women plant rice seedlings in a rice field in the village of Baghmara in the Baksa district of Assam, India.

David Talukdar | NurPhoto | Getty Images

The price of rice – a staple food in Asia – has peaked over 7 years due to the coronavirus epidemic, with importers rushing to store grain while exporters are slowing shipments.

According to the Thai Rice Exporters Association, the price of 5% off-white rice – the industry benchmark – rose 12% from March 25 to April 1. Rice prices are now the highest since late April 2013, according to Reuters data.

The higher prices are due to expectations of increased demand for Thai rice after the other major exporters, India and Vietnam, were both faced with disruptions in exports of the strategic staple food in because of the epidemic of coronavirus disease, officially known as COVID-19. Asia produces 90% of the world’s rice supply and consumes the same amount.

Rice traders in India have stopped signing new export contracts as labor shortages and logistical disruption hamper delivery of existing contracts, Reuters reported, citing industry officials. The Vietnamese government has implemented export restrictions.

Even before the March peak, rice prices started to climb in late 2019 due to a severe drought in Thailand and strong demand from Asian and African importers. Thailand is the second largest exporter in the world after India and ahead of Vietnam.

Rising prices come despite expectations of robust production this crop year and carryover stocks of rice and wheat reach record levels, said Samarendu Mohanty, regional director for Asia at the Peru-based International Potato Center, a non-profit group that researches food security.

The Thai Rice Exporters Association said in a weekly report that rice stocks were plentiful, but acknowledged the difficulties of finding work amid the virus epidemic as Cambodian workers return home due nationwide blockage.

This could make seasonal farming activities difficult and jeopardize future crops, Mohanty said in a blog post.

“Unlike other sectors, agriculture is strongly affected by the lockdown schedule rather than its duration due to the strict planting and harvesting schedule,” he wrote last week. “If the planting season is missed, there will be no harvest for the season or for the whole year. “

North America, Europe and China are now facing labor shortages and supply chain disruptions for spring planting, he added. “If they miss the planting window, they are made for the whole year. “

In other parts of the world like India and other South Asian countries, now is the time to harvest for winter crops like wheat, potato, cotton and some fruits and vegetables. Farmers need migrant workers to operate the machines and perform other manual labor such as loading and unloading products.

“Although import purchases of certain products have accelerated in recent weeks, logistical difficulties are reported as movement restrictions and quarantine measures become widespread,” said the International Grain Council in a recent report. He also recognized a strong recovery in demand in the short term, especially for rice and wheat foods.

Wheat prices are also higher

It’s not just rice, prices for wheat – a staple grain used to make pasta and bread – have also risen recently.

The Chicago Board of Trade’s benchmark wheat futures contract was hit by the coronavirus outbreak earlier this year, but has seen gains since mid-March.

Wheat futures prices also rose about 15% in the second half of March due to consumer buying panic and crop concerns over closings in North America and Europe .

Rice and wheat prices will remain buoyant in the coming weeks, Fitch Solutions said in a note.

“Supply is currently tightening due to the impact of the Covid-19 (coronavirus) pandemic on demand and trade, as well as the consequences of bad weather among the main producers (severe drought in Southeast Asia and in Australia), “said Fitch Solutions.

Although the prices of wheat and rice are currently low in absolute terms compared to historical averages, they are still significantly higher year-over-year, he noted.

“This implies that food price inflation will accelerate further in 2020, continuing from 2019, when the African swine fever epidemic led to a prolonged surge in meat prices,” he said. he adds.

Food industry associations and organizations are urging countries to keep trade open.

“Countries cannot be blamed for ensuring internal food security during this difficult time, but countries must be very careful in taking unnecessary political measures that could create panic in the market,” said Mohanty. “Countries need to know that there is enough grain in the warehouses to feed the world for more than four months. But these grains are of no use if countries resort to trade restrictions. “

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