Brazilian Rice Prices Surged 36.57% YoY in Early Mar-24 Amid Production Challenges

In Brazil, rice prices have shown a substantial YoY increase of 36.57% in early Mar-24, although there was a 2% MoM decline. This price surge is due to challenges in rice production in Rio Grande do Sul due to persistent wet conditions, with the region contributing nearly 70% of Brazil's rice output. Additionally, historical data suggests that previous El Niño years, such as 2015/16 and 2002/03, reduced rice yields in the region, further impacting prices. Moreover, India's ban on non-basmati white rice exports since Jul-23 has contributed to a 17% surge in global rice futures prices since July 1st.
Brazilian rice price has seen a significant year-over-year (YoY) increase of 36.57% in early Mar-24, rising to USD 1.12 per kilogram (kg) compared to USD 0.82/kg in the same period in 2023. However, there was a 2% month-over-month (MoM) decline from USD 1.16/kg in Feb-24. Notably, Brazilian rice prices have risen significantly from the range of USD 0.80 observed in May-23. This price increase is due to challenges faced by Brazil's rice production in Rio Grande do Sul due to persistent wet conditions, with the region contributing nearly 70% of the country's rice output. Despite being a major rice supplier in South America, Brazil has witnessed a decline in rice acreage over the past two decades as other crops like corn and soybeans compete for cultivation space. While there are expectations of a 10% YoY increase in the 2024 rice planting area, excessive precipitation poses a reduced yield threat. Southern Brazil typically experiences heavy rainfall from October to December, peaking during December to February, often exacerbated by El Niño events. In 2023, Rio Grande do Sul saw the second-highest total accumulated rainfall in at least 20 years. Historical data shows that previous El Niño years, such as 2015/16 and 2002/03, led to reduced rice yields. Moreover, a significant rice exporter, India, banned non-basmati white rice exports in Jul-23 to curb domestic food price inflation. This resulted in a 17% surge in global rice futures prices since July 1, 2023.