Asian rice prices posted their biggest monthly jump in nearly two decades in May, and could rally further as weather risks and war-driven surges in energy and fertilizer costs threaten production.
Thailand white rice, an Asian benchmark, rallied 20% in May, the most in a month in data going back to 2008. Rice futures on the Chicago Board of Trade also jumped 15% this month.
Prices will continue to trend higher, said Bin Hui Ong, a commodities analyst at BMI, a unit of Fitch Solutions, which lifted its forecast for Chicago futures earlier this month. An expected El Niño event — which can bring hotter, drier weather to parts of Asia — presents further upside, she added.
With fuel and fertilizer supplies still disrupted due to the near-closure of the Strait of Hormuz, farmers across import-reliant Asia are bracing for the high input costs to start weighing on rice production — a key cornerstone of the region’s economies. The crop is critical to the region’s food security and countries including Thailand, Vietnam and India are also major suppliers abroad.
