Global Rice Production Projected to Decline for First Time in a Decade

Global Rice Production Set to Decline for First Time in a Decade

The United States Department of Agriculture has issued a global crop report indicating that global rice production is expected to decline for the first time in 11 years. According to the report, output in the coming 2026-27 season is projected to be approximately 538 million tons, a decrease from previous years.

The largest declines in production are anticipated in India, Myanmar, and the United States, where the harvest is expected to fall by 15% compared to last year due to farmers planting less. This decrease, combined with record consumption and trade, is likely to curtail global stockpiles.

The decline in production comes as a result of several factors, including a spike in fertilizer and energy costs driven by the war in Iran, which is disrupting operations for farmers in Asia. Some growers are considering skipping plantings of the new crop, which is known for being fertilizer-intensive, as a result of these increased costs.

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The crop in India, the world's top grower, may also be impacted by a lower-than-average monsoon, which is expected to be curtailed by the looming El Niño weather pattern. The annual rains, which typically start around June, are crucial for India's rice production. Despite this, the USDA still expects India's exports to remain strong, while shipments from the United States will shrink.

Rice is a staple food in many Asian countries, and smaller supplies risk raising consumer prices, which could contribute to broader inflation. The Philippines, for example, has already seen an uptick in inflation.

At the wholesale level, Thai white rice, a benchmark in Asia, has increased by approximately 15% since late March. Futures on the Chicago Board of Trade jumped 8% last week, the most in two years. The United Nations' Food and Agriculture Organization has also reported an increase in its rice index, as the war-induced rise in energy prices pushes up production and marketing costs in most exporting countries.

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Note: The exact production figures for India, Myanmar, and the United States are not provided in the original report, but the percentage changes are given.