Asia May Expect An Increase In The Price Of Rice Soon As Rice Farmers In The U.S. Continue To Struggle With The El Niño Phenomenon
As the weather phenomenon El Niño continue to pester rice farmers in the U.S., Asian countries may expect a sharp increase in the price of rice in the months to come.
The Guardian reported on Sunday some market products have hit their lowest price, such as soybean, cotton and sugar, while the price for rice increases to nearly 40 percent at approximately $12.90 per hundredweight, its highest since August 2014.
The El Niño phenomenon has caused planting delays in America's main rice-growing regions, including Mississippi, Louisiana, Arkansas and Texas. Hackett Financial Advisors President Shawn Hackett noted Arkansas and Texas harvests may fall 15 to 20 percent below average.
"The crop is an unmitigated disaster," said Hackett.
Fortunately, despite being hit as well by the El Niño phenomenon, the price for rice in Asia is still mirroring the product excess due to the rice stockpiling of the Thai government, which is expected to last for up to three years. The demand for rice in Asia, however, is still high and stocks are expected to diminish rapidly.
According to Accuweather.com's senior meteorologist Dale Molher, people may expect El Niño to reach its highest point later this year and the effect may last four to five months after.
According to Helena Independent Record on Sept. 6, El Niño has hit its strongest in nearly 20 years causing drought in top rice-growing countries, including the Philippines, Thailand, Indonesia and India. Consequently, increasing in price by 28 percent since May at 11.8 cents per pound.
So far, the price for the global benchmark high-quality Thai rice is at $350 per ton, compared to the U.S.'s $550 per ton. According to Hackett, the price difference between the U.S. and Thai rice is usually at $60 to $70.
Asian consumers are now concerned regarding the supply of rice in the future as El Niño continues to hit the region. This in turn may cause an increase in the price of rice. The Philippines is already reportedly importing rice due to shortage in harvest and Indonesia may soon be doing the same.
"So far the Asian price has been stable to weak because of the Thai [situation] and India had a pretty good crop," said Jack Scoville, vice-president at Price Futures Group. "But I think the worm is going to turn over there ... sooner than later."