Chinese villagers growing rice seedlings in a paddy field in Qiandongnan, Guizhou Province, China on April 2023.
Future Publishing|Future Publishing|Getty Images
Global rice markets might come under additional stress as the world’s leading rice manufacturer China comes to grips with heavy rain and flood dangers.
“Heavy rain in China’s grain-producing north-eastern region that will reduce yields is likely to put upward pressure on already high global rice prices,” Fitch Ratings stated in a current report.
China is the world’s biggest manufacturer of rice, and flood alert levels were raised for 3 provinces that represent 23% of the nation’s rice output: Inner Mongolia, Jilin and Heilongjiang, the report mentioned.
The world’s second biggest economy has actually been swamped by ravaging floods in current weeks. Typhoon Doksuri was among the worst storms to strike northern China in years, with capital Beijing damaged by the heaviest rains in 140 years.
Fitch mentioned that numerous crucial grain production locations in those 3 provinces were impacted by heavy rains and residues of Typhoon Doksuri, and they’re set to deal with “another deluge as Typhoon Khanun moves north.”
The resulting soaked grain fields will minimize crop yields for the year, the Fitch report mentioned, although the complete degree of the damage is not yet clear.
“This will lift China’s domestic grain prices and likely drive higher imports in 2H23 to partially offset the potential yield loss,” the credit rankings company stated, including the nation might require to aim to import more rice if its own harvests fail, which might drive international rice costs even greater.
Global rice costs have actually risen to their greatest in near 12 years, according to the Food and Agriculture Organization All Rice PriceIndex
Other market watchers are approximating greater rice costs ahead after India prohibited non-basmati white rice exports last month, and Thailand advised farmers to plant less rice in a quote to conserve water as an outcome of low rains.
India, which represents more than 40% of international rice trade, prohibited exports of non-basmati white rice on July 20, as the federal government aimed to deal with skyrocketing domestic food costs.
Rice costs are hovering at years highs, with rough rice futures last trading at $1598 per hundredweight (cwt).
In addition to rice, the Fitch report likewise pointed out corn and soybean amongst significant crops grown in Inner Mongolia, Jilin and Heilongjiang, which will be affected by flood dangers. China is anticipated to import more of both grains this year compared to the last.
