On Wednesday, the Thai Rice Exporters Association revealed that the price of Thai white rice 5% broken, a key Asian benchmark, reached the highest level since Great Financial Crisis. This surge is mainly attributed to increasing fears of a global shortage due to the damaging effects of the El Nino weather phenomenon on Asian farmlands and India's recent decision to restrict certain rice exports.
Thai white rice 5% broken hit $648 per ton this week, the highest level since October 2008. Prices are up over 50% since the start of 2022.
The weekly change in rice prices is about a 13% surge, the largest since the index began in the summer of 2008.
We provided readers with enough understanding that rice, which is critical to the diets of billions of people worldwide, was headed for a shortage:
- Sept. 2022: The Stage Is Being Set For A Massive Global Rice Shortage
- May 2023: Global Rice Shortage Looms, Set To Be The Biggest In Decades
- May 2023: Thai Rice Crop In Crosshairs Of El Nino As Farmers Are Warned About Water Shortages
And now comes the panic:
India's move to ban some rice exports sent shockwaves worldwide and was to ensure domestic supplies were adequate to prevent a hyperinflationary spike in food prices that would ultimately spark social unrest. Also, Thailand, the second-biggest shipper, has asked farmers to switch to crops that use less water due to arid conditions.
India's export restriction applies to shipments of non-basmati white rice.
The latest report on global food prices from the Food and Agriculture Organization of the United Nations showed the global food index, which tracks monthly changes in the international prices of globally-traded food commodities, jumped the most in 18 months.
Last month, Bloomberg quoted Peter Timmer, Professor Emeritus at Harvard University, who warned: "There is considerably more reason for concern now that rice prices in Asia could spiral out of control pretty quickly."