KUALA LUMPUR (Oct 11): BMI has cut its forecast for its key rice futures contracts, at an average price of US$14.85 per cwt (hundredweight) in 2025, following easing of rice exports by India — Malaysia’s top rice supplier.

BMI, a unit of Fitch group, said this marks a 6.3% downward revision from its previous Chicago Board of Trade (CBOT)-listed second-month rough rice futures.

BMI’s 2024 average price outlook has also been adjusted to US$16.35 per cwt, slightly lower than earlier projections. As of Oct 4, 2024, rice futures closed at US$15.25 per cwt.

The revision followed India’s move to ease its rice export restrictions end of September, impacting global rice prices. 

The Indian Ministry of Finance repealed the ban on non-basmati white rice exports and reduced the duty on parboiled rice exports from 20% to 10%. Following these changes, Thailand saw a significant drop in rice export prices. For example, quotations for 5% broken white rice decreased by over 10% between Sept 25 and Oct 2.

Meanwhile, BMI said US rice exports have shown strong performance, with traders accumulating nearly 965,000 tonnes by the week ending Sept 26, 2024. 

This represents a 26.9% increase compared to the previous year and a four-season high. Harvesting progress is also ahead, with 86% of the US rice crop harvested by early October.

The Atlantic hurricane season poses some risk, but the pace of the US rice harvest reduces potential threats. 

Speculators have reduced their net short positions in rough rice futures, reflecting changing market sentiment. India’s previous export restrictions had initially supported elevated international rice prices.

India’s easing of restrictions has already influenced market dynamics, leading to a sharp fall in prices for Thai rice exports. We anticipate further price adjustments in the FAO Rice Price Update in November. Our long-term outlook predicts a production surplus in the global rice sector for the 2024/2025 season.

World rice production is expected to rise by 1.3% to 528 million tonnes, while consumption will increase marginally to 522 million tonnes. 

However, the easing of Indian export restrictions might boost rice consumption, presenting potential risks to our forecast. “We also note a potential upside risk to production due to anticipated La Niña conditions in Southeast Asia,” said BMI.

“In the coming years, we expect the rice market to remain in surplus, though weather-related disruptions could alter this outlook,” said BMI.

Asia’s per capita rice consumption is likely to decline due to income growth and dietary diversification. Sub-Saharan Africa is poised to drive global rice consumption and import demand.

Between 2010 and 2022, per capita rice consumption in Africa increased, with Eastern Africa seeing significant growth. The region’s rice production deficit has widened, sustaining strong demand for imports. 

Demographic trends, including population growth, will likely increase Africa’s share of global rice consumption. Consequently, the share of world rice production that is exported is expected to rise.