Typhoon Impact on the Global Rice Market
|Samarendu Mohanty||Nov 14, 2013|
It is too early to say anything on the extent of the damage to the rice crop in the Philippines from Typhoon Haiyan (local name Yolanda). The current rice crop in the affected regions—including Mimaropa; Bicol; Western, Central, and Eastern Visayas; Northern Mindanao; and Caraga—accounts for less than 10% of the Philippines’ annual rice production, and most of the rice crop in these regions had already been harvested before the typhoon came. But the extent of the damage brought by flooding on rice that was stored on-farm and in public and private warehouses remains to be seen.
Beyond the Philippines, a cyclone in India has also damaged the standing rice crop in two coastal states—Odisha and Andhra Pradesh—in mid-October. The damage was caused more by flooding that followed the cyclone rather than the cyclone itself. In addition to the cyclone and flooding in the east, the late season rainfall has also affected the yield and the quality of the rice crop in the northwest region. According to an article published in the Wall Street Journal on 7 November 2013, the Odisha-based Central Rice Research Institute has recently estimated a decline in Indian rice production due to cyclone and flood damage—from 104.4 million tons in 2012-13 to 100 million tons in 2013-14. Before the cyclone hit, the International Grain Council had estimated Indian rice production to be 107 million tons in 2013-14.
Before these extreme weather events struck, rice prices (white and parboiled) in major rice-exporting countries have already seen a 10–20% decline in the past few months because of weak global demand. Thailand has led the bunch with a nearly US$100 per ton drop in prices as a result of the Thai government’s decision to off-load some of its mortgage stocks. The prospect of a good wet season crop in the majority of rice-growing countries in Asia have kept potential buyers on the sidelines because of the expectation that rice prices will weaken further in the coming months.
The recent weather events in India and the Philippines are unlikely to have a significant impact on the global rice market, though. The surplus rice in Thailand should keep prices stable in the coming months, even if the Philippines imports more and India exports less.