Agri Commodities

Global Rice Market Set To Log Its Largest Shortfall In Two Decades In 2023: Fitch Solutions

More than 3.5 billion people worldwide, particularly in Asia-Pacific, where 90% of the world’s rice is consumed, are being impacted by rising rice prices because of declining production in nations like China, the U.S., and the European Union. 

Rice Production & Pricing Predictions 

Fitch Solutions projects that 2023 will see the greatest deficit on the global rice market. 

Major importers will be harmed by such a large deficit for one of the most widely grown grains in the world, analysts told CNBC. 

According to commodities analyst Charles Hart of Fitch Solutions, “at the global level, the most evident impact of the global rice deficit has been, and still is, decade-high rice prices.” 

In a report released on April 4 by Fitch Solutions Country Risk & Industry Research, it was predicted that rice prices would remain stable until 2024 at current highs. 

The report predicts that the price of rice will only drop from an average of $17.30 per cwt through 2023 to $14.50 per cwt in 2024. The Cwt unit of measurement is applied to a variety of products, including rice. Hart mentioned, “Given that rice is the staple food commodity across multiple markets in Asia, prices are a major determinant of food price inflation and food security, particularly for the poorest households.” The report predicted that there would be an 8.7 million tonnes global shortfall in 2022–2023. 

According to Hart, that would be the biggest global rice deficit since 2003-2004 when the global rice markets generated a deficit of 18.6 million tonnes. 

Dwindling Rice Supplies 

There is a shortage of rice as a result of the ongoing conflict in Ukraine as well as poor weather in nations that produce rice, such as China and Pakistan.

In China, extensive farmland was destroyed by floods and heavy summer monsoon rains in the second half of the previous year. 

The United States Department of Agriculture (USDA) reported that in Pakistan, the impact of last year’s severe flooding was “even worse than initially expected,” as annual production fell 31% year over year. 

Hart also mentioned, “Given that rice is the staple food commodity across multiple markets in Asia, prices are a major determinant of food price inflation and food security, particularly for the poorest households.” According to a scientific study, rice is a crop with a high risk of simultaneous crop loss during an El Nino event. 

Rice became a more appealing alternative due to tighter supply constraints as well as the rise in prices of other major grains following Russia’s invasion of Ukraine in February 2022, according to Hart. Rice as a substitution has driven up its demand. 

Kelly Goughary, a senior research analyst at GRO Intelligence said, “The global rice export market, which is typically tighter than that of the other major grains, has been affected by India’s export restriction.” In September, India banned the export of broken rice, a decision Hart claimed was a “major price driver” for rice. 


The shortage might soon be a thing of the past, and surplus is on the horizon. The world rice market will return to “an almost balanced position in 2023/24,” according to Fitch Solutions. 

According to Oscar Tjakra, senior analyst at global food and agriculture bank Rabobank, lower year-over-year rice production in other nations, including the U.S. and EU, has also contributed to the deficit. 

Tjakra mentioned, “The global rice production deficit situation will increase the cost of importing rice for major rice importers such as Indonesia, Philippines, Malaysia and African countries in 2023.”

According to Gro Intelligence senior research analyst Kelly Goughary, many nations will also be required to dig into their domestic stockpiles. She predicted that the deficit would have the biggest effects on the nations with the highest domestic food price inflation, including Pakistan, Turkey, Syria, and some African countries. 

As a result, rice futures could decline annually to below their 2022 level while still being elevated at “more than one third above their pre-Covid (2015–2019) mean value, in part because inventories are being restocked following an extensive period of drawdown.” 

“We believe that the rice market will return to surplus in 2024/25 and then continue to loosen through the medium term.” 

Fitch also predicts that by 2024, rice costs could fall by almost 10% to $15.50 per hundredweight. 

In its report, Fitch hinted that India would be the “principal engine” of the world’s rice production over the following five years. “It is our view that global rice production will stage a solid rebound in 2023/24, expecting total output to rise by 2.5% year on year.” 

Even though India’s Meteorological Department expects “normal” monsoon rainfall, the report issued a warning that the country’s wheat harvest would still be in danger from forecasts for extreme heat and heat waves in the second and third quarters of 2023. The same may be true for other countries. 

China is the world’s largest producer of both rice and wheat, and its rice-growing regions are currently dealing with the worst drought in more than 20 years, according to Goughary. She added that major European rice-producing nations like France, Germany, and the UK are currently experiencing the worst drought in 20 years.

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