https://www.cnbc.com/2023/04/19/global-rice-shortage-is-set-to-be-the-largest-in-20-years-heres-why.html Skip Navigation logo * watchlive logo Markets * Pre-Markets * U.S. Markets * Currencies * Cryptocurrency * Futures & Commodities * Bonds * Funds & ETFs Business * Economy * Finance * Health & Science * Media * Real Estate * Energy * Climate * Transportation * Industrials * Retail * Wealth * Life * Small Business Investing * Personal Finance * Fintech * Financial Advisors * Options Action * ETF Street * Buffett Archive * Earnings * Trader Talk Tech * Cybersecurity * Enterprise * Internet * Media * Mobile * Social Media * CNBC Disruptor 50 * Tech Guide Politics * White House * Policy * Defense * Congress * Equity and Opportunity CNBC TV * Live TV * Live Audio * Business Day Shows * Entertainment Shows * Full Episodes * Latest Video * Top Video * CEO Interviews * CNBC Documentaries * CNBC Podcasts * CNBC World * Digital Originals * Live TV Schedule Watchlist Investing Club * Trust Portfolio * Analysis * Trade Alerts * Meeting Videos * Homestretch * Jim's Columns * Education PRO * Pro News * Pro Live * Subscribe * Sign In Menu * Make It * select + ALL SELECT + Credit Cards + Loans + Banking + Mortgages + Insurance + Credit Monitoring + Personal Finance + Small Business + Taxes + Help for Low Credit Scores + Investing + SELECT + All Credit Cards + Find the Credit Card for You + Best Credit Cards + Best Rewards Credit Cards + Best Travel Credit Cards + Best 0% APR Credit Cards + Best Balance Transfer Credit Cards + Best Cash Back Credit Cards + Best Credit Card Welcome Bonuses + Best Credit Cards to Build Credit + SELECT + All Loans + Find the Best Personal Loan for You + Best Personal Loans + Best Debt Consolidation Loans + Best Loans to Refinance Credit Card Debt + Best Loans with Fast Funding + Best Small Personal Loans + Best Large Personal Loans + Best Personal Loans to Apply Online + Best Student Loan Refinance + SELECT + All Banking + Find the Savings Account for You + Best High Yield Savings Accounts + Best Big Bank Savings Accounts + Best Big Bank Checking Accounts + Best No Fee Checking Accounts + No Overdraft Fee Checking Accounts + Best Checking Account Bonuses + Best Money Market Accounts + Best CDs + Best Credit Unions + SELECT + All Mortgages + Best Mortgages + Best Mortgages for Small Down Payment + Best Mortgages for No Down Payment + Best Mortgages with No Origination Fee + Best Mortgages for Average Credit Score + Adjustable Rate Mortgages + Affording a Mortgage + SELECT + All Insurance + Best Life Insurance + Best Homeowners Insurance + Best Renters Insurance + Best Car Insurance + Travel Insurance + SELECT + All Credit Monitoring + Best Credit Monitoring Services + Best Identity Theft Protection + How to Boost Your Credit Score + Credit Repair Services + SELECT + All Personal Finance + Best Budgeting Apps + Best Expense Tracker Apps + Best Money Transfer Apps + Best Resale Apps and Sites + Buy Now Pay Later (BNPL) Apps + Best Debt Relief + SELECT + All Small Business + Best Small Business Savings Accounts + Best Small Business Checking Accounts + Best Credit Cards for Small Business + Best Small Business Loans + Best Tax Software for Small Business + SELECT + All Taxes + Best Tax Software + Best Tax Software for Small Businesses + Tax Refunds + SELECT + All Help for Low Credit Scores + Best Credit Cards for Bad Credit + Best Personal Loans for Bad Credit + Best Debt Consolidation Loans for Bad Credit + Personal Loans if You Don't Have Credit + Best Credit Cards for Building Credit + Personal Loans for 580 Credit Score or Lower + Personal Loans for 670 Credit Score or Lower + Best Mortgages for Bad Credit + Best Hardship Loans + How to Boost Your Credit Score + SELECT + All Investing + Best IRA Accounts + Best Roth IRA Accounts + Best Investing Apps + Best Free Stock Trading Platforms + Best Robo-Advisors + Index Funds + Mutual Funds + ETFs + Bonds * USA * INTL * watchlive Search quotes, news & videos Watchlist SIGN IN Create free account logo Markets Business Investing Tech Politics CNBC TV Watchlist Investing Club PRO Menu Agriculture Global rice shortage is set to be the biggest in 20 years Published Tue, Apr 18 20238:12 PM EDTUpdated 4 Hours Ago Lee Ying Shan@LeeYingshan WATCH LIVE Key Points * Rice production for 2023 is set to log its largest shortfall in two decades, according to Fitch Solutions. * "At the global level, the most evident impact of the global rice deficit has been, and still is, decade-high rice prices," Fitch Solutions' commodities analyst Charles Hart told CNBC. * There's a strained supply of rice as a result of the ongoing war in Ukraine, as well as weather woes in rice-producing economies like China and Pakistan. Bowl of white rice at Bamboo Sushi restaurant in San Ramon, California, January 23, 2022. Gado | Archive Photos | Getty Images From China to the U.S. to the European Union, rice production is falling and driving up prices for more than 3.5 billion people across the globe, particularly in Asia-Pacific - which consumes 90% of the world's rice. The global rice market is set to log its largest shortfall in two decades in 2023, according to Fitch Solutions. And a deficit of this magnitude for one of the world's most cultivated grains will hurt major importers, analysts told CNBC. "At the global level, the most evident impact of the global rice deficit has been, and still is, decade-high rice prices," Fitch Solutions' commodities analyst Charles Hart said. Rice prices are expected to remain notched around current highs until 2024, stated a report by Fitch Solutions Country Risk & Industry Research dated April 4. The price of rice averaged $17.30 per cwt through 2023 year-to-date, and will only ease to $14.50 per cwt in 2024, according to the report. Cwt is a unit of measurement for certain commodities such as rice. Given that rice is the staple food commodity across multiple markets in Asia, prices are a major determinant of food price inflation and food security, particularly for the poorest households. Charles Hart commodities analyst, Fitch Solutions "Given that rice is the staple food commodity across multiple markets in Asia, prices are a major determinant of food price inflation and food security, particularly for the poorest households," Hart said. The global shortfall for 2022/2023 would come in at 8.7 million tonnes, the report forecast. That would mark the largest global rice deficit since 2003/2004, when the global rice markets generated a deficit of 18.6 million tonnes, said Hart. Strained rice supplies There's a short supply of rice as a result of the ongoing war in Ukraine, as well as bad weather in rice-producing economies like China and Pakistan. In the second half of last year, swaths of farmland in the world's largest rice producer China were plagued by heavy summer monsoon rains and floods. The accumulated rainfall in the country's Guangxi and Guangdong province, China's major hubs of rice production, was the second highest in at least 20 years, according to agriculture analytics company Gro Intelligence. Similarly, Pakistan -- which represents 7.6% of global rice trade -- saw annual production plunge 31% year-on-year due to severe flooding last year, said the U.S. Department of Agriculture (USDA), labeling the impact as "even worse than initially expected." Workers cultivate rice seedlings at an agricultural service station in Hangzhou in east China's Zhejiang province Sunday, April 16, 2023. Future Publishing | Future Publishing | Getty Images The shortfall is partly due to result of "an annual deterioration in the Mainland Chinese harvest caused by intense heat and drought as well as the impact of severe flooding in Pakistan," Hart pointed out. Rice is a vulnerable crop, and has the highest probability of simultaneous crop loss during an El Nino event, according to a scientific study. In addition to tighter supply challenges, rice became an increasingly attractive alternative following the surge in price of other major grains since Russia's invasion of Ukraine in February 2022, Hart added. The resulting rice substitution has driven up demand. Whose rice bowls will be affected? Lower year-on-year rice production in other countries like the U.S. and EU have also contributed to the deficit, said Oscar Tjakra, senior analyst at global food and agriculture bank Rabobank. "The global rice production deficit situation will increase the cost of importing rice for major rice importers such as Indonesia, Philippines, Malaysia and African countries in 2023," said Tjakra. Many countries will also be forced to draw down their domestic stockpiles, said Kelly Goughary, senior research analyst at Gro Intelligence. She said countries most affected by the deficit would be those already suffering from high domestic food price inflation such as Pakistan, Turkey, Syria and some African countries. China is the largest rice and wheat producer in the world and is currently experiencing the highest level of drought in its rice growing regions in over two decades. Kelly Goughary senior research analyst, Gro Intelligence "The global rice export market, which is typically tighter than that of the other major grains ... has been affected by India's export restriction," said Fitch Solutions' Hart. India banned exports of broken rice in September, a move Hart said has been a "major price driver" for rice. Surplus in the horizon However, the shortage may soon be a thing of the past. Fitch Solutions estimates that the global rice market will return to "an almost balanced position in 2023/24." That could lead to rice futures falling in year-on-year terms to below their 2022 level, but remain elevated at "more than one third above their pre-Covid (2015-2019) mean value, in part as inventories are replenished after a period of extensive drawdown." "We believe that the rice market will return to surplus in 2024/25 and then continue to loosen through the medium term." Fitch further projects that the prices of rice could drop almost 10% to $15.50 per hundredweight in 2024. "It is our view that global rice production will stage a solid rebound in 2023/24, expecting total output to rise by 2.5% year on year," Fitch's report forecast, hinging on India being a "principal engine" of global rice output over the next five years. A combine harvester cuts through a field during a wheat harvest at a farm in Karnal, Haryana, India, on Thursday, April 13, 2023. Anindito Mukherjee | Bloomberg | Getty Images However, rice production remains at the mercy of weather conditions. While India's Meteorological Department expects the country to receive "normal" monsoon rainfall, forecasts for intense heat and heat waves through the second and third quarters of 2023 continue to pose a threat to India's wheat harvest, the report cautioned. Other countries may not be spared either. "China is the largest rice and wheat producer in the world and is currently experiencing the highest level of drought in its rice growing regions in over two decades," said Goughary. Major European rice-growing countries like France, Germany and the UK have also been afflicted with the highest level of drought in 20 years, she added. Stock picks and investing trends from CNBC Pro: These 6 global stocks are 'Buffett-style' picks, according to Credit Suisse Bank of America is doubling down on a lesser-known chip stock -- and gives it 50% upside This France ETF is booming despite domestic turmoil. Thank the Chinese consumer logo * Subscribe to CNBC PRO * Licensing & Reprints * CNBC Councils * Select Personal Finance * CNBC on Peacock * Join the CNBC Panel * Supply Chain Values * Select Shopping * Closed Captioning * Digital Products * News Releases * Internships * Corrections * About CNBC * Ad Choices * Site Map * Podcasts * Careers * Help * Contact * * * * * * * News Tips Got a confidential news tip? We want to hear from you. 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