BANGKOK: A worldwide upsurge in rice prices is picking up speed, fueled by a drought in Thailand and worries about access to supplies in the Philippines and other Southeast Asian importing nations. Thailand is one of the world’s two leading rice exporters, and with rice now trading at 16-month highs, even consumers in Japan could feel the pinch this summer and beyond.
Thai government authorities put the export price for grade-A, long-grain rice at $461 per ton for early June, a price level not seen since February 2015. Export prices for Thai rice began surging in April and are now up 17% since the start of the year. The market has not witnessed this kind of jump in eight years.
Thailand is going through a drought similar to what it suffered in 2015. With rice production now expected to drop for a second straight year, buyers in neighboring consumer markets like Singapore and the Philippines are taking action.
Thailand can grow two rice crops a year, and farmers there are gearing up to plant seedlings for the rainy season crop. However, production will be delayed, according to a report released by the U.S. Department of Agriculture in late May. Reservoir levels are so low that it will be difficult to supply water to rice farmers until July, the report said. Meanwhile, the parched ground stands cracked in the producing region of Suphan Buri Province 150km north of Bangkok.
Estimates put Thailand’s rice production at 15.8 million tons in fiscal 2016, which would be a 16% decline from the previous year. In April the nation exported 650,000 tons, or 7% less than a year earlier.
The Japanese government purchases around 770,000 tons of rice each year from trading companies to meet its “minimum access” rice-import quota. Of that amount, some 340,000 tons is Thai rice. The agriculture ministry expects it will need to pay more for these rice imports starting this summer.
Among private enterprises in Japan, the impact will be felt mainly by companies that process Thai rice to make sweets, miso pastes and rice-based alcoholic beverages. Makers of awamori, a distilled spirit from Okinawa, will be hit particularly hard because Thai rice is the rice of choice.