BMI sees sustained downtrend in rice prices
Global rice prices are projected to drop by 7.9 percent this year on the back of ample supplies, particularly from India, according to a research unit of Fitch Solutions.
In a report, BMI slashed its forecast for Chicago Board of Trade (CBOT)-listed second-month rough rice futures in 2025 to $12.8 per hundredweight (cwt) from $13.9 per cwt.
The report stated that prices of this commodity have come under significant pressure this year, largely on expectations of abundant production.
Rice prices reached $11.6 per cwt on Sept. 9, down 20.9 percent from a year ago, the lowest since July 2020. Year-to-date, prices have declined by 17.5 percent.
“Following a period of elevated prices in the first half of 2024, largely driven by export restrictions imposed by India, the market has been steadfastly bearish over recent months,” BMI said.
The research firm estimated that the rice production of India, the largest exporting market, would climb by 8.8 percent to 150 million tons in the 2024-2025 crop year from 138 million tons in 2023-2024.
BMI said the volume “would still be a record harvest” even if the output for the 2025-2026 season may only see a meager increase of 0.5 percent to 151 million tons, a reflection of the ongoing oversupply in the market
This scenario reinforced BMI’s expectations that rice prices would remain muted until the end of this year. The same is expected through 2026.
“The particularly strong monsoon season for 2025 is the principal factor informing our bullish outlook for India as the majority of India’s rice crop is grown during the monsoon season, with harvests starting in November,” it said.
On a global level, rice output is seen to inch up by 0.4 percent, outpaced by the 1.8 percent growth in consumption.
Rice production is projected to increase to 542 million tons, while consumption will rise to 539.4 million tons. The result is a decline in the surplus to 2.6 million tons from 10.2 million tons.
“We expect consumption to increase by a greater magnitude than production driven both by normal demand gains associated with population growth and urbanization as well as the sharp decline in rice prices over recent months,” the report noted.
Key risks
BMI said the short-term main risk was that the strong Indian monsoon season could damage the rice crop.
India accounts for around 25 percent of global production and around 35 percent of global exports, the think tank said.
“While expectations for above-average rainfall have been met, we note that there could be areas where rainfall was too abundant and could ultimately end up weighing on the size of the harvest,” it said.
Another market risk is the looming policy of the Indian government to curb exports, which is usually enforced not because of lower domestic production but also due to electoral ambitions or developments in domestic prices.
In the long run, the global rice market is anticipated to remain in surplus through the 2028-2029 crop season.
BMI said unfavorable weather conditions in major rice-producing markets were still a risk. “On the demand side, we expect continued income growth in Asia to result in increased diversification of diets and in this way weigh on per capita rice consumption rates in the region in the medium term,” it said.
