Global rice prices witnessed a colossal hike in the just-ended month of May, led by a notable surge in the 'Indica' species, which is mostly consumed by South and Southeast Asians, according to the Food and Agriculture Organization (FAO).
The FAO, based in Rome under the United Nations, released its monthly report on Friday, revealing a 2.9 per cent increase in the rice price index in May 2023 compared to April.
The report stated that the FAO All Rice Price Index averaged 127.8 points in May 2023, marking its highest level in nominal terms since October 2011.
It also highlighted that the hike was mostly driven by the Indica species, which is predominantly consumed by Bangladeshis and other South and Southeast Asians.
According to the report, "Indica quotations drove May's Index increase, rising 3.2 per cent above their April values."
The index of aromatic rice also experienced a surge of over 3.0 per cent, while Glutinous rice exhibited a 1.4 per cent increase. However, Japonica species showed a decline of 1.8 per cent, as mentioned in the report.
During May, export prices of Indica rice were generally higher in all major Asian origins, as suppliers executed previously sealed deals with Asian buyers and concerns over the potential production impacts of the emergence of an El Niño phenomenon spread.
The report noted that quotations rose the most in Vietnam and Pakistan, where tightening supplies contributed to the price.
In the case of Pakistan, the volatile rupee, elevated inflationary pressure, and heightened local demand for rice as a substitute for wheat flour added further pressure, leading Pakistani quotations to reach their highest levels since September 2008, making them the highest-priced Asian offers of Indica rice.
Price increases were relatively more moderate in Thailand and India. In Thailand, the dearth of fresh sales capped the price increase, while in India, increased Rabi arrivals following some rain-induced harvest delays limited the hike, according to the report.
When asked about the surge in Indica and its impact, Prof Dr Rashidul Hasan, who teaches agribusiness and value chain at Sher-e-Bangla Agricultural University, told the FE that it would definitely affect the South Asian markets.
He also mentioned that the government has been able to source 0.9 million tonnes of rice so far in the outgoing financial year, thanks to a relatively stable trend in the global market.
Additionally, he noted that the strategy of sourcing rice from different countries has helped in acquiring rice on time.
Regarding the impact of the current volatility, Prof Hasan said, "But the current volatility would affect Bangladesh's purchase both by the government and the private sector."
He noted that the private sector has only been able to source 0.42 million tonnes of rice in the outgoing FY, despite being permitted to import over 1.5 million tonnes.
According to the FAO report, India offered parboiled rice at US$ 381 to US$ 425 per tonne, while Pakistani and Thai offers ranged between US$ 450 and US$ 509 per tonne in May.
In Dhaka city, rice prices have remained static over the past month, maintaining the previous record high. Coarse rice is being retailed at Tk 52-55 per kg, medium rice at Tk 62-68 per kg and finer rice at Tk 75-98 per kg in the retail markets, as reported by the Trading Corporation of Bangladesh (TCB) and local groceries.
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