Following the ban on wheat exports and the regulation of sugar exports in May 2022 from India, there are concerns about further extending the prohibition to rice. In addition, current unfavorable weather conditions on W1 of July 22 in India delayed the sowing of the most crucial summer crops such as rice, maize, and soybeans due to the uneven distribution of monsoon rainfall. As a result, the current sown area of summer crops in W1 of July-22 stands at 40.67M ha, which is a 9.3% YoY decrease, according to data from the Ministry of Agriculture and Farmers' Welfare of India. Following rice acreage, it is down to 7.2 M ha, which is a 24.12% YoY decrease.
Rice wholesale prices in top importing countries
According to Tridge data, the wholesale price of rice in India in W2 of July-22 was USD 0.31/kg and is holding steady. On W1 July 22, the United States and other World Trade Organization (WTO) members announced their disagreement with India's trade-distorting rice subsidies, which are government-driven. As a result, India has, in the period from 2019-2022, increased support for the market price of rice from USD 5B to USD 6.32B, respectively- the support levels have been 11.46%, 13.71%, and 15.14% exceeding the 10% de minimis limit. India has significantly influenced the US rice industry, nearly tripling exports over the past ten years, largely thanks to subsidized rice prices.
Top Export Flows of Rice
India is not insulated from global impacts, and farmers feel the increase in input costs, primarily fertilizers. A possible export ban of rice from India would significantly influence the price hike. A lack of fertilizers will reduce rice yields in India, which is already under pressure due to adverse weather conditions and a reduction in planted areas.
Rice is the main food staple for most Asia countries, and developments in India can significantly affect price movements, shortages, and market disruptions. India is the world's number one rice exporter, with a 40% global share. Total quantities of rice exported in 2021 were 21.27M mt, and the total export value was USD 9.62B. However, with the decrease in production, there is a risk of a decline in exports.