World rice prices hit a nearly two-year high due to the adverse impact of El Niño

Adverse weather conditions in Asian countries caused by the El Niño phenomenon could sharply reduce rice supply, which has already led to an increase in world rice prices to a 2-year high. Thus, export prices for Thai white rice with 5% broken grains reached the highest level since December 2024 at $499/t, and futures for unhusked rice on the Chicago SWOT have increased by 80% during the year, although prices for other cereals, in particular wheat and corn, are steadily declining.

 

The reason for the increase in rice prices was drought in the countries of South and Southeast Asia, which provide half of the world's rice production. India, the world's largest rice exporter, is experiencing a severe shortage of rainfall. A reduction in the harvest will negatively affect export potential, so market participants are closely monitoring the development of El Niño.

 

The USDA forecasts that global rice production could decline for the first time in 10 years in the 2026/27 MY. The UN Food and Agriculture Organization (FAO) also expects production to decline.

 

According to the USDA FAS, Thailand's off-season rice crop, which is highly dependent on irrigation, could be hit the hardest as water shortages will reduce production in the next cycle. Moisture shortages in India and other Asian countries are increasing risks for rice importers, especially those dependent on supplies from Southeast Asia.

 

Thus, in the Philippines, the world's largest importer of rice, prices for this crop in October were 21% higher than in October 2025.

 

Further increases in global rice prices could fuel inflation in countries in Asia, Africa and the Middle East, where the crop is a staple food. Therefore, weather conditions, the size of the new harvest and the export policies of major producers will be the determining factors for the market in the coming months.