Rice is likely to cost more this year

After a year of generally subdued global rice prices, this year started with a notable increase in prices from various origins. With South Africa being a net importer of rice, the surge in prices presents upside risks to consumer food price inflation.

The comforting part, however, is SA will likely import the same volume of rice as last year.

The International Grains Council (IGC) forecasts SA’s 2023 rice imports at 1.1 million tons. This is roughly unchanged from 2022, when about 73% of the imports originated in Thailand, 23% in India and the rest come from various countries, including India, Pakistan, Brazil and Vietnam. These origins will also likely remain the same.

Regarding supply, the outlook is slightly downbeat compared to the previous season. IGC forecasts 2022-23 global rice production at 504 million tons, down by two percent year on year.

This is mainly because of an expected decline in the harvest in India, Vietnam, the US, Pakistan, China, Bangladesh, the Philippines and Brazil.

Unfavourable weather conditions and the reduction in planted area are the main drivers behind this expected decline in rice harvest in these countries.

Notably, they have overshadowed the forecast improvement in rice production in Thailand and Indonesia.

Since solid consumption levels and this expected decline in production, the global stocks are forecast at 168 million tons, down by six percent from the previous season. These production dynamics are supportive of rice prices.

Thailand (five percent broken), Pakistan and Vietnam rice prices are already trading at over $450 (about R8 000) per ton. These are the highest in nearly two years.

The price trend is unlikely to change in the medium term as supplies will remain tight.

Ultimately, rice importing countries such as SA will have to pay more this year compared to 2022, when rice was the anomaly from the general rise in agricultural commodity prices, especially in the months after the start of the Russia-Ukraine war.