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The global rice market has been grappling with a significant production deficit, set to be the largest since 2003. Various factors, including deficient rains in India and severe floods in Pakistan, have led to tight supplies and a tightening of the market.
In this episode of the State of the Economy podcast, Charles Hart, an agri-business analyst at BMI and Fitch Solutions, explains that while there is no physical supply shortage, the deficit implies a slight tightening of the market due to a series of long-run surpluses. Rice prices have been on the rise, reaching levels not seen since the 2008 global food crisis.
However, the forecast for 2023-2024 suggests a shift back to surplus, albeit a relatively low one compared to previous years. This expectation is based on assumptions of more normal weather conditions, including a partial rebound in rice production in flood-affected areas like Pakistan.
He talks about the impact of the El Nino weather phenomenon on the rice market remains uncertain. El Nino typically brings warmer and drier conditions, which pose challenges for rice cultivation in Southeast Asia and South Asia. However, farmers may adapt by switching to less water-intensive crops. The intensity and duration of El Nino can vary, making it difficult to predict its exact impact on production.
India, one of the major players in the global rice market, is expected to see a 2 per cent increase in rice production. The country’s rice surplus is projected to grow, allowing for inventory accumulation or higher export volumes. However, recent export restrictions imposed by India and increased minimum support prices may limit its competitiveness in the global market.
Thailand, historically a leading rice exporter, has faced reports of reduced production due to expected rainfall reduction from El Nino. While this may impact the overall production, the actual yield will depend on the level of rainfall received.
Hart said that the global rice market is experiencing a significant production deficit, but the forecast suggests a return to surplus in the coming years. The impact of El Nino and export restrictions on specific countries, along with weather conditions, will play a crucial role in shaping the market dynamics.
Listen in!
Host: MR Subramani; Producer: V Nivedita
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About the State of the Economy podcast
India’s economy has been hailed as a bright spot amid the general gloom that seems to have enveloped the rest of the world. But several sectors continue to stutter even as others seem set to fire on all cylinders. To help you make sense of the bundle of contradictions that the country is, businessline brings you podcasts with experts ranging from finance and marketing to technology and start-ups.
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