Rice prices surged the most in more than two years on concerns about the supply outlook after the cost of fuel and fertilisers jumped due to the Iran war, prompting some Thai farmers to leave their crop in the ground.
Thai white rice 5% broken, an Asian benchmark, jumped 10% to US$423 ($538.03) a ton in the week ended April 8, the biggest gain since August 2023. While it is an early sign that rising input costs are starting to impact the market, prices have been on a prolonged downtrend and were recently near the lowest in over a decade.
Some farmers in Thailand have suspended rice cultivation because their profits simply aren’t enough to cover the ballooning costs, said Oscar Tjakra, a senior commodities analyst at Rabobank in Singapore. The challenging situation has been compounded by a long dry season, which has significantly reduced yields and tightened supplies of the current crop, he added.
Tjakra said a stronger baht and higher freight and insurance costs due to the war in the Middle East contributed to the jump in rice prices.
Thailand is the third-largest exporter globally, according to data from the US Department of Agriculture. Farmers in the country, along with others in the region, are currently collecting their off-season crop and getting ready for planting of the main crop that starts as early as May.
US President Donald Trump has indicated he may be preparing to wind down the war with Iran, offering some relief to broader markets, but it will take some time for energy flows to return to normal through the Strait of Hormuz. That may mean input costs remain elevated for longer, denting rice output.
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