Rice futures are retreating from their best levels in seven years, sliding on news that key producers will boost production and exports of the commodity. With coronavirus pandemic triggering panic-buying worldwide, important market players are attempting to take advantage of the higher prices. Suffice it to say, the global food market has been drastically altered in these times.
May rice futures tumbled $0.17, or 1.19%, to $14.155 per ton at 16:26 GMT on Tuesday on the Chicago Board of Trade (CBoT). Rice prices have slipped about 1% over the last week, but they have surged nearly 6% year-to-date. Over the last 12 months, rice is up close to 30%.
The Vietnamese government is set to resume rice exports for April and May shipments, but the Ministry of Industry and Trade will limit volumes to 800,000 tons. This represents a 40% drop from the same time a year ago. The government is set to make an official announcement in the coming days. Late last month, Hanoi prohibited new rice export contracts to ensure domestic inventories were enough to cope with the COVID-19 outbreak.
India is projected to enjoy a record harvest that will lead to output levels of 117.47 million metric tons in the 2019-2020 marketing year. While other countries are imposing restrictions on overseas sales, India’s immense crops are allowing the country to satisfy both domestic and global demand. Some analysts forecast that India could even post a surplus by the end of the coronavirus crisis.
According to the US Department of Agriculture (USDA), global rice production is still expected to remain unchanged from the previous marketing year: 499.31 million tons. Ending stockpiles, though, are forecast to jump 4% to 182.3 million tons.
The global supply chain and travel bans have added to the cost of rice deliveries, stoking price hikes. When you factor in soaring demand for the food staple, it explains why prices are trading at their best levels since 2013.
Vijay Setia, the former president of the All India Rice Exporters’ Association, says that nations will adapt to changing market conditions.
If the fear of the unknown prevails and markets get dented with hoarding etc., then of course respective governments have to resort to means at their disposal to handle the situation. Imposing restrictions on external trade could be one such measure.
In other agricultural commodities, May corn futures shed $0.0275, or 0.83%, to $3.2875 a pound. May wheat futures tumbled $0.06, or 1.08%, to $5.495 per bushel. May soybean futures declined $0.0675, or 0.79%, to $8.475 a bushel.