In W24 in the rice landscape, the World Bank indicates that an upcoming El Niño dry spell is expected to reduce rice production in Southeast Asia, raising the prospects of higher food prices. The Philippines Atmospheric, Geophysical, and Astronomical Services Administration (PAGASA) expects the El Niño event to occur by Q1-2024. This projection is supported by the National Oceanic and Atmospheric Administration (NOAA), which reports an 82% chance of El Niño developing between May and July 2023 and an 89% chance from June to August 2023. Previous research has shown that low rainfall during past El Niño episodes since 2000 led to a decrease of rice production by 4% to 11%. As a consequence, the anticipated El Niño phenomenon is estimated to reduce average global rice production by 1.3% and significantly disrupt 13.4% of rice harvest areas, with Bangladesh, India, Indonesia, and Vietnam being the most affected. It is also worth noting that the availability of fertilizers is expected to have an impact on rice production during this period. With Southeast Asia accounting for nearly 60% of global rice production and over 80% of global rice exports, the potential decline in output poses concerns for global food prices.
According to the Indonesian Minister of Agriculture, Syahrul Yasin Limpo, El Niño is expected to affect Indonesia in the second half of 2023, impacting approximately 560-870 thousand ha of agricultural land dedicated to rice. As a result, the Indonesian Ministry of Agriculture has taken proactive measures to mitigate the impact. These steps include conducting location mapping of areas susceptible to drought, ensuring the distribution of harvests and food reserves, expediting planting activities to utilize remaining rainfall, enhancing the availability of agricultural equipment and machinery (alsintan) to facilitate planting, and implementing initiatives to increase water availability. The latter involves constructing and repairing ponds, ditch dams, deep wells, infiltration wells, rehabilitating tertiary irrigation networks, and utilizing pumping systems. Also, Minister of Trade, Zulkifli Hasan, indicates that the Indonesian government plans to increase rice import quotas in response to the anticipated impact of El Niño. The procurement of rice import quotas will be raised from 2 million mt to 3 million mt, with the additional 1 million mt planned to be sourced from India. This proactive measure aims to address potential rice demand fluctuations caused by El Niño. Budi Waseso, the Main Director of Perum Bulog, further clarified that the rice imports will be allocated throughout 2023. The imports will be carried out gradually, taking into consideration the domestic rice production conditions.
In 2023, Thai rice exports are expected to surpass 8 million mt, indicating a favorable outlook for the country's rice industry. This increase in global rice demand can be attributed to global apprehensions regarding the potential impacts of the El Niño weather phenomenon. As a result, many countries are taking measures to expand their rice stockpiles. The Philippines, for instance, plans to increase its rice acquisition by 2-3 million mt, while Indonesia is expediting the process of procuring substantial quantities of rice from Thailand and Vietnam. Similarly, Iraq's rice imports are estimated to remain at around 1 million mt, maintaining the same volume as in 2022. These developments signify the growing importance of Thai rice in meeting global demand and ensuring food security in various countries. Rice producers in the Manyas and Gönen districts of Balıkesir in Turkey have faced a delayed start to the planting season in 2023 due to heavy rainfall. The rains, particularly in April and May, have caused a delay of approximately one month in the rice planting process. Despite the challenges, Turkish rice farmers in the region are utilizing various methods such as agricultural drones, manual labor, and tractors for cultivation. In the Manyas Plain area, around 60 thousand decares of rice registered in the Farmer Registration System (ÇKS) have been planted on a total land area of 65 thousand decares. The rice crop is expected to be harvested in October or possibly even November, considering the delayed planting.
According to the USDA, the latest ratings for US rice indicate that 67% of the crop was classified as good to excellent, a decrease of 3% WoW. However, it is worth noting that 94% of the US rice crop has emerged, in line with the five-year average. Lastly, the Brazilian rice market continues to face an adverse situation, pressured downwards by the end of the harvest in Rio Grande do Sul and the influx of rice supply from Mercosur countries, exerting downward pressure on prices. According to SAFRAS and Mercado, the unfavorable relationship between the exchange rate and global rice prices has led many industries to consider importing rice as a more viable option compared to sourcing it domestically, benefiting markets like Paraguay. SECEX data indicates that Brazilian paddy rice sales to global markets in May-2023 reached around 111.88 thousand mt, while exports of the processed product totaled 58.31 thousand mt. Meanwhile, Brazilian processed rice imports surpassed 91.72 thousand mt, with external purchases of husk rice reaching only 2.78 thousand mt. In Brazilian ports, around 76.4 thousand mt are scheduled for shipment in the first half of June. In the March-June period, Brazilian rice (husk base) exports reached 399.21 thousand mt, down compared to 631.29 thousand mt in the same period in 2022. Brazilian rice producers face a challenging scenario, with difficulties in finding a balance between production costs and adequate profits. Also, the weakness of the US Dollar against the Brazilian Real, coupled with the downward pressure exerted by other commodities such as soybean and corn, has contributed to the challenges facing the rice market.