On Sunday, rice prices increased due to pricier importing expenses to cover sellers charging domestically-grown grains.
Rough rice futures for September delivery increased by 0.52% to $15.94 per hundredweight on July 23’s Asian afternoon session.
According to analysts, when the imported commodity’s price goes up, its domestic value follows. Besides, the imported crop is the domestic crop’s competitor.
They added that Vietnam announced its plan to lower exports to four million tons per year in May. Its government aims to produce better-quality rice while decreasing low-quality grain output. The reduction equates to 15.00% of the output by 2025 and 10.00% for its 2023 volumes.
In addition, rice values witnessed gains due to India’s ban on non-basmati white grain deliveries. The Risk and Industry Research stated that the restrictions on Indian grains would weigh on the global rice market.
Based on experts, the government’s decision to ban would have both material implications and substantial economic ramifications. They added that higher Indian food price inflation by 4.50% year-on-year pushed the country to cut exports.
Furthermore, the world’s top rice exporter is banning deliveries to maintain food prices at affordable levels. A weaker number of exports creates a more upward price movement in the global grain shipment market.
El Niño Threats Boosts Rice Prices
According to analysts, rice prices in Indonesia will spike due to El Niño weather threats. The event could cause drought and reduce the crop’s production.
As previously mentioned, India decided on an export ban for the crop. As a result, Indonesia was pushed to raise prices since it is one of its importers.
In addition, the country is dependent on Thailand, Vietnam, and India to maintain a secure domestic rice inventory. Also, Vietnam aims to cut 44.00% of its grain export.
Experts said that Indonesia can expect this situation by ensuring they have a good production level. They added that it should have an alternative exporter besides India and Vietnam.
