Asian benchmark rice prices climbed 4% to a 15-month high as worsening harvest outlooks in key production hubs threaten global supply. Thai white rice with 5% broken grains rose to $446 per ton as of May 20, its third consecutive weekly gain and the highest level since February 2025.
"The current surge is the product of long-neglected structural weaknesses now colliding with sharper, external forces," Ramakrishnan M, Managing Director at Primus Partners, said. The foundational problem is dependency on imports and key shipping lanes.
The price increase is underpinned by a sharp rise in farming input costs, with soaring fertilizer and fuel prices squeezing margins. Shipping through the Strait of Hormuz, a critical artery for global trade, has slowed to a trickle, with only 12 ships crossing in a recent 24-hour period compared to a daily average of 125-140. This has choked off the supply of key fertilizer components like urea, sulfur, and ammonia.
The potential for a drier-than-average monsoon season in India, the world's largest rice exporter, is further compounding supply fears. The market is now looking toward India's monsoon performance and any potential government export restrictions as the next major catalyst.
The disruption in the Strait of Hormuz has had a direct impact on fertilizer prices, a key input for rice cultivation. The strait handles approximately one-third of the global seaborne fertilizer trade, totaling around 16 million tons. With the world's largest urea production facility in Qatar interrupting supply, farmers in Southeast Asia are facing difficult choices, with some potentially forgoing planting for the season. This supply shock is reflected in the futures market, with Chicago rice futures touching their highest level since August.
The ripple effects are already being felt across Asia. In the Philippines, a major rice importer, prices surged 13.7% year-over-year in April, highlighting the vulnerability of nations dependent on international markets. The situation extends beyond rice, with edible oil prices also under pressure. India, which imports up to 60% of its edible oil, is facing a surge in inflation for refined and mustard oils, prompting government appeals to reduce consumption. The diversion of palm oil for biodiesel production in Indonesia is further tightening global vegetable oil supplies.
This article is for informational purposes only and does not constitute investment advice.
