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🇸🇬 Singapore /Economy & Trade

Asian rice prices surge 20% in May as war, weather threaten output

From The Straits Times · () English

Translated from English, summarized and contextualized by DistantNews.

At a glance

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  • Asian rice prices saw their largest monthly increase in nearly two decades in May, rising 20% for Thai white rice.
  • Factors contributing to the surge include potential El Nino weather patterns, and increased energy and fertilizer costs driven by geopolitical conflict.
  • The rising costs threaten rice production in key Asian economies, impacting food security and global supply, though ample stocks in some countries may cap price increases.

Rice prices across Asia experienced a dramatic surge in May, marking the most significant monthly jump in nearly two decades. Thai white rice, a key benchmark for the region, climbed 20%, while rice futures on the Chicago Board of Trade also saw a substantial 15% increase. Analysts predict further price hikes are likely.

Prices will continue to trend higher.

— Bin Hui OngA commodities analyst at BMI, a unit of Fitch Solutions, commenting on the price forecast.

Several factors are converging to drive up the cost of this staple grain. The anticipated El Nino weather phenomenon threatens to bring hotter, drier conditions to parts of Asia, potentially impacting crop yields. Compounding this are the ongoing disruptions to global energy and fertilizer supplies, exacerbated by geopolitical conflicts. Farmers across Asia, many of whom rely on imports, are bracing for higher input costs that could significantly affect rice production.

This situation poses a considerable risk to food security in a region where rice is a cornerstone of the economy and diet. Countries like Thailand, Vietnam, and India are major rice producers and exporters. The rising costs have already forced some farmers to delay or skip planting the main crop season. "With costs rising and weather this hot, it's not a good time to sow a new crop," said Tran Van Be Bay, a farmer in Vietnam's Vinh Long province, who plans to skip a planting cycle due to the expense of fertilizer.

With costs rising and weather this hot, it's not a good time to sow a new crop.

— Tran Van Be BayA farmer in southern Vietnam explaining his decision to skip a planting cycle.

Rice cultivation is notably intensive in its use of fertilizers and often relies on diesel-powered irrigation pumps. Prices for nitrogen fertilizers have reportedly surged by 40% to 50% in countries like Thailand, Cambodia, and the Philippines since the start of the war in Ukraine. While current reserves may suffice for the immediate period, shortages could emerge if the fertilizer trade does not stabilize. Any significant reduction in Asian output could have a ripple effect on global supply, although ample stocks in major producers like India and weaker global demand might moderate international price increases.

Applying more fertiliser not only costs more but also harms the plants.

— Tran Van Be BayA farmer in southern Vietnam explaining the challenges of rising fertilizer prices.
DistantNews Editorial

Originally published by The Straits Times in English. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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