The global rice market is undergoing a seismic shift as Thai rice prices surge in the wake of India’s sudden suspension of rice exports. This unforeseen disruption has ignited chaos within the market, leaving both buyers and sellers in a deadlock. In the span of a week, the price of Thai white rice has catapulted from 17 baht/kg (17,000 baht/tonne) to 22 baht/kg (22,000 baht/tonne), directly following India’s embargo on rice exports.
Compounding the turmoil, pending orders for Indian rice now hang in the balance, as the suspension took effect immediately after its announcement. Indian exporters are seeking clarity from their government regarding the fate of prepared shipments. However, no definitive solutions have been announced thus far.
The global rice landscape was already facing pressures prior to India’s suspension announcement on July 20. In the first half of 2023, rice demand was robust due to concerns over impending El Niño-related weather disruptions. Purchasing nations sought to secure rice stocks to meet domestic needs. During this period, India exported a staggering 12 million tonnes of rice, while Thailand and Vietnam exported more than 4 million tonnes each.
As the second half of the year unfolds, experts predict that the market dynamics will mirror the first half. Despite these expectations, the annual target for rice exports stands at 8 million tonnes. However, if India maintains its export suspension stance, Thailand’s exports could potentially reach 8.5-9 million tonnes. Yet, the prospect of India reentering the market presents a challenge, as major Thai clients such as the Philippines, Indonesia, and Malaysia may opt for the more cost-effective Indian rice. In such a scenario, Thailand’s ability to attain its export target remains uncertain.
At present, India holds the mantle of the world’s largest rice exporter, trailed by Vietnam and Thailand. Given Vietnam’s substantial rice exports in the first half of the year, Thailand is poised to potentially secure the second position. As the rice trade undergoes these fluctuations, it underscores the intricate interplay between global agricultural dynamics, trade policies, and market shifts that ultimately shape the flow of this essential staple.