Analysis: Factors driving world rice prices in the coming time

Movements from India and China, the Russia-Ukraine conflict, droughts in Brazil and Paraguay can all affect the global rice market.

This is probably not a secret for most rice producers: The rice market differs from other commodity markets in that it is dominated primarily by India and China.

According to Milo Hamilton, co-founder and senior agricultural economist of Firstgrain Inc., which publishes a newspaper for farmers and rice buyers, the market of 1.4 billion people has “no impact” normal” for rice.

China is both the largest exporter and the largest importer of grain, so moves from this country could cause anomalies in the rice market, such as the use of rice for food. feed on livestock, which would probably never happen in the United States.

Hamilton believes China may have supplied up to 50 million tonnes of rice for livestock because of high corn and soybean prices in recent months.

Speaking about the prospects for rice at the Mid-South Farm and Gin Show farmers fair in Memphis, Tenn, Hamilton said: “This number may not seem like a lot right now, but remember, 50 million tons is a lot. more than all the rice produced in the Western Hemisphere – about 5% of world rice production.”

Ukraine’s influence

Although the markets are very different, Hamilton said he keeps an eye on rice and wheat prices in the news due to the Russia-Ukraine conflict. Wheat prices rose sharply in a few days as Ukraine is a major exporter.

On February 26, he said: “Because of what happened last week (Russia-Ukraine conflict), rice prices are at a new low relative to wheat. As someone said this week, for with rice, sometimes nothing happens for decades, and then the changes over the decades happen in a week. We don’t even know its full meaning.”

“I am fluent and read Russian, and I know there is no relationship between Russia and rice, but it could be spread to other regions,” he added.

Hamilton says he has noticed in his 40 years of trading in the rice market that the rice/wheat ratio can be very low and then reverse on its own.

“There are different reasons why that happens, but we are currently at a very low rice/wheat price ratio (0.8), he noted. In the next six months, my hunch is that rice prices in the US won’t be low. It will go up.”