Despite a recent downward revision by the U.S. Department of Agriculture (USDA), global rice production for the 2024-2025 season is still on track to hit record levels. According to the USDA’s Economic Research Service (ERS), the latest projection for global rice production has been reduced by 464,000 tonnes, bringing the total estimate to 527.7 million tonnes. This reduction is significant, but even with the adjustment, the figure remains the highest on record for rice production worldwide.

The latest “Rice Outlook” report, released in mid-August 2024, also forecasts global domestic rice use at 527 million tonnes, just slightly below earlier projections. This suggests that even with revised expectations, the world’s consumption of rice will still reach unprecedented levels in the upcoming season.

Key Factors Behind the Downgrade

The reduction in global rice production estimates is mainly due to decreased output expectations from some of the world’s key rice producers, such as Vietnam, the United States, and Ukraine. In Vietnam, weather-related issues, including high temperatures and water shortages, have impacted yields, while Ukraine’s agricultural sector continues to struggle with the ongoing conflict. In the U.S., adverse weather conditions in rice-growing regions also contributed to lower forecasts for rice production.

However, the overall production decline was offset by upward revisions for countries like Russia and Kazakhstan, where favorable weather conditions and better-than-expected harvests have contributed to increased yields. This allowed global production to remain historically high despite setbacks in other regions.

Global Trade Outlook for Rice

While rice production may be slightly lower than anticipated, the USDA has revised its global rice trade forecast upward. Trade is expected to grow by 112,000 tonnes, pushing the global rice trade volume to 55.2 million tonnes for 2024-2025. The revision is attributed to stronger export performances from Thailand and the United States, both of which are expected to ship larger volumes of rice to international markets.

However, the rice export market remains highly volatile. For instance, the USDA notes that export restrictions in India, which is the world’s largest rice exporter, are still creating ripple effects in the global market. India imposed these restrictions to manage its domestic food supply and stabilize prices, which has created shortages in other regions, particularly in Southeast Asia and Africa.

Price Movements Across Global Markets

The “Rice Outlook” report noted a slight dip in rice prices across various markets. Prices for most grades of regular, whole-grain milled rice from Thailand have dropped by 1-2% over the past month. In contrast, prices for Vietnamese rice varieties, including the 5% brokens from both the winter-spring and summer-autumn crops, have risen. This increase was mainly driven by strong demand from major importers like the Philippines and Indonesia.

In South America, rice prices have generally trended upward, excluding Argentina, where prices have remained more stable. In the United States, prices for long- and medium-grain milled rice have been stable as well, though the price of rough rice continues to fall, particularly for southern long-grain varieties and California’s medium- and short-grain rice.

According to the U.S. Rice Producers Association (USRA), even with the USDA’s reduced production forecast, global rice output is still up by 14% compared to the previous year, primarily due to larger crop sizes in some regions. The USRA’s “Rice Advocate” publication also highlights that while global consumption has slightly declined, particularly in countries like Vietnam, the Philippines, and Kenya, the overall trade downturn is largely linked to Brazil’s supply issues and India’s export restrictions.

Regional Market Variations

In Uruguay, rice prices have also dropped to $803 per tonne, largely due to reduced demand from Brazil and the European Union. Meanwhile, the International Grains Council (IGC) in its August 2024 Grain Market Report indicated that average international rice prices remained mostly unchanged month-on-month. This balance was due to price adjustments in key exporting countries that offset each other. For example, in Thailand, weakened demand caused a slight decrease in white and parboiled rice prices, while in Vietnam, the price of 5% broken rice increased by $14 to $563 per tonne, driven by fresh sales to Indonesia and the Philippines.

The FAO’s August 2024 Rice Price Update also reported a 2.4% drop in global rice prices in July, marking a 12-month low. Prices for Indica rice fell by 2.9%, while Japonica prices were down 2.1%. However, aromatic rice prices remained stable, and glutinous rice prices edged up by 0.6%, driven primarily by reduced supply in Thailand.

Looking Ahead

Despite the various challenges impacting production and pricing, the forecast for 2024-2025 indicates that global rice markets are stabilizing, with supply concerns easing due to record production levels. However, the complex interplay of factors like export restrictions, climatic challenges, and fluctuating demand across different regions will continue to influence rice prices and trade dynamics.

As the rice market moves into the latter half of 2024, stakeholders will closely monitor how these factors evolve, particularly in major exporting countries like India, Thailand, and Vietnam. The ability to adapt to these changing conditions will be crucial for maintaining market stability and ensuring global food security.