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Rice futures recently jumped out to 15-year highs in Asia, following an expansion of India’s halt on certain rice exports. India makes up 40% of the global rice trade and with nearly half of its rice now of the market, other major exporters like Vietnam, Thailand, and Pakistan are picking up the slack. However, overwhelming international demand could eventually cause these countries to follow in India’s footsteps, initiating trade restrictions in an effort to protect supplies in their own domestic markets. 

Meteorological phenomenon El Niño is a further complicating factor, diminishing Asian fishery yields and bringing potential drought conditions to rice-rich countries like Indonesia. Western markets have been less impacted by shrinking rice supplies than those in Asia thus far.

Related Futures & ETF: US No. 2 Long Grain (Rough Rice), Thailand 5% Broken White Rice, Invesco DB Agriculture Fund (DBA)

Asian rice futures, represented by benchmark Thai white rice, surged to their highest level in 15 years last week, as pressure on international markets continues to mount. An ongoing ban on broken rice exports out of India, now in place since September of last year, was expanded to cover non-basmati white rice on July 20, ratcheting up prices toward $650 per ton.

Al-Jazeera notes that India is typically the world’s biggest rice exporter, accounting for nearly 40.0% of the global rice trade in 2022, having exported 22 million tonnes. Non-basmati and broken rice accounted for roughly 43.2% of those exports and the suspension of those shipments from India have left a hole of roughly 9.5 million – 10 million tonnes in global rice markets…

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