If the weaker rand/dollar exchange rate persists, we could see noticeable upside pressure on the prices of imported food products. One such particular product is rice. The global prices of rice are already high, and South Africa imports all of its domestic requirements of this commodity.
From the 2021/22 marketing year (MY) to date, the global demand for rice has increased following a surge in the prices of other major grains, which has driven up global rice prices. In May 2022, rice from various origins, such as Thailand, Vietnam, India, and Pakistan, traded below US$400 per tonne. But in May 2023, except for India, these rice price origins traded at over US$500 per tonne.
Therefore, importing countries now face increasing pressure. South Africa imports roughly 1,1 million tonnes of rice annually, and 2023/24 MY’s volume is forecast to remain unchanged from the previous season. As such, the current global rice price trend and the rand/dollar exchange remain vital variables to monitor over the coming months.
Nonetheless, over the second half of this year, the prices of maize and wheat products are expected to continue to moderate. Hence, consumers may once again reduce their rice consumption and opt for more of the other grains, especially if rice prices remain elevated.
With that said, we still believe the global rice price increase should be temporary. The International Grains Council forecasts a 2% recovery in global rice production in 2023/24 MY to 521 million tonnes.
This recovery in rice production is expected across all key producing countries such as India, Vietnam, Thailand, the US, Pakistan, China, Indonesia, and the Philippines.
The production recovery will be due to anticipated favourable weather conditions and yield improvements. Rice ending stocks in the same season are also set to improve by 1% to 173 million tonnes, which should also drive the moderation in global rice prices towards the end of 2023 into 2024.
The anticipated recovery in rice availability and its price moderation going towards 2024 will benefit South African consumers, assuming that the rand/dollar exchange rate continues to improve from its record weaker levels.
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