Rice prices scale fresh 15-year high as supply risks linger

India’s Prime Minister Narendra Modi is also concerned about accelerating food inflation before general elections next year.

Rice prices reached a fresh 15-year high on mounting concerns that increased demand and the impact of El Niño will further tighten supplies of the grain that is a staple for billions across Asia and Africa.

Thai white rice 5% broken, an Asian benchmark, climbed 2.5% from the prior week to $650 a ton on Wednesday, according to the Thai Rice Exporters Association. That’s the highest level since October 2008.

Prices most recently rallied to that milestone in early August in the wake of sweeping export curbs from top shipper India and as dry weather threatened the Thai crop. After retreating for most of September and October, price gains quickened in November. This could keep food inflation elevated in the coming months, especially in rice-reliant countries like the Philippines.

India’s Prime Minister Narendra Modi is also concerned about accelerating food inflation before general elections next year. The cost of rice is increasing despite tight export restrictions, a good harvest and ample state stockpiles, according to the food ministry. The staple has risen about 12% annually in the past two years, and officials have asked millers to cut retail prices.

In a further sign of the strength of demand for Thai rice, Prime Minister Srettha Thavisin said this week Indonesia plans to buy 2 million tons from the country by the end of next year. That comes just as El Niño, which parches crops across Asia, is expected to cut Thai paddy output by about 6% in 2023-24.

The increase in rice costs this year is in stark contrast to other staples — wheat and corn. The Thai white rice price is up 36% in the past year, while wheat futures in Chicago are down 20% and heading for the first decline in seven years. Corn futures have lost about 30% this year.