Agricultural markets—particularly trade in cereals such as wheat and maize—have seen significant volatility over the past year as impacts of the Russia-Ukraine war, combined with tight global stocks, drove prices to record (nominal) highs. The rice market, by contrast, has been generally tranquil (Figure 1). Large global supplies and the lack of any direct trade connection to the Ukraine conflict left rice relatively immune to the price spikes seen with other commodities. But recently there have been signs of trouble. Rice prices have risen (up 20%-30% from September 2022), due in part to the floods in Pakistan. Global stocks fell about 5% year over year and are now projected to be at their lowest level since 2017/18.
The rapid emergence of El Niño, a recurring climate pattern that results in warming of sea surface temperatures (SSTs) in the eastern Pacific Ocean, combined with a forecasted positive Indian Ocean Dipole, a similar phenomenon, is raising concerns about possible impacts on rice production in South and Southeast Asia.