The World Bank expects global rice prices to fall this year despite surging prices for other grains such as wheat and corn amid supply disruptions triggered by the war in Ukraine.
In its biannual Commodity Markets Outlook released in Washington on Tuesday, the bank said its grain price index was projected to climb 20.4 percent this year compared with 2021.
Wheat prices are forecast to jump 42.7 percent and corn prices are expected to be 19.4 percent higher. But rice prices are seen falling by 7.3 percent.
“Rice prices have been more stable than prices for other grains,” said the outlook, which focuses on the war’s impact on commodity markets.
Although rice prices in the March quarter were six percent higher than the December quarter, they were down more than 20 percent from the March quarter last year.
“The relative stability of rice prices during the past three quarters followed a seven-year high in early 2021 amid heightened pandemic-related concerns about global supply and announcements of export restrictions,” the bank said.
The outlook noted U.S. government forecasts for global rice production to rise nearly one percent this season — with higher output by Thailand offsetting lower supplies from Indonesia.
At the same time, world rice stocks are likely to remain relatively high. “Global consumption is set to grow more than two percent, leaving the stocks-to-use ratio similar to last season’s ratio and high by historical norms,” the outlook said.
The forecasts follow a report that rice prices in Thailand in March were well below year-earlier levels due to good supply and expectations for an above-average secondary crop this season.
But the report — by the Food and Agriculture Organisation of the United Nations (FAO) — noted higher prices in Myanmar linked to seasonal trends and strong international demand.
“Seasonal price increases were also behind the rice price increases in Cambodia,” the FAO said.
Cambodia — among the world’s top ten rice exporters— recorded double-digit gains in rice shipments during the March quarter, the Ministry of Agriculture, Forestry and Fisheries says.
Exports of milled rice climbed almost 11 percent from a year earlier to 170,539 tonnes and shipments of paddy were up nearly 14 percent at 1.39 million tonnes.
As for overall food prices this year, the World Bank’s food price index is forecast to soar 22.9 percent, mainly fueled by a 29.8 percent surge in prices for oils and meals like soybean meal.
Prices are expected to leap 45.9 percent for palm oil, 34.4 percent for coconut oil and 29.9 percent for soybean oil.
During the March quarter, the bank’s oils and meals price index jumped 20 percent from the December quarter to hit a record high.
“Palm, palm kernel, and soybean oil experienced the largest price increases,” the outlook said.
“The surge reflects a broad-based tightness in the markets for the main edible oilseeds — which tend to be close substitutes to each other — after supply disruptions in Ukraine, which accounts for more than 30 percent of global sunflower production.
“Indonesia’s recent export ban on palm oil aggravated an already tight edible oil market.”
Two percent growth is forecast for this season’s output of the eight most important edible oils — including soybean and palm oil, which together account for two-thirds of global supplies.
Compared with four percent growth expected six months ago, the forecast is a substantial downward revision. “But it is on par with historical averages,” the bank said.
Most growth is expected from palm oil (up 5.4 percent) and palm kernel oil (up 5.6 percent).
But soybean oil output will remain largely unchanged – compared with 3.5 percent growth forecast six months ago — and production of the seven major oilseeds is seen falling by three percent.
“This is a considerable reversal for the season’s outlook — six months ago the expectation was a five percent increase,” the bank said, blaming the shortfall on lower production of soybeans in South America and rapeseed oil in Europe.
Among other commodities, the bank expects crude oil prices to surge 42 percent this year.
Prices for urea — the nitrogen fertiliser whose industrial production relies on natural gas and coal — are seen skyrocketing 75.9 percent.
After Russia’s invasion of Ukraine, the bank said, urea prices surged to levels well above the peaks hit during the global food price crisis in 2008.
“The price surge, which began last year, also reflects production cuts in response to sharply rising raw material costs and trade policies.
“Production cuts have been pronounced in Europe due to soaring prices for natural gas.
“In China, rising coal prices and power rationing forced fertiliser producers to cut production and exports as well — the latter to ensure domestic availability.
“Russia also temporarily banned exports of ammonia nitrate, a high nitrogen-rich fertilizer.
But “soaring prices are likely to bring online significant volumes of new capacity, including in Brunei Darussalam, India, and Nigeria.”
Urea prices are forecast to ease in 2023 but “likely remain at historically high levels for as long as coal and natural gas prices remain elevated,” the bank said.
Source: Agency Kampuchea Press