The cost of rice, a staple food for many countries in South-East Asia, is at its highest point in 7 years.

According to the Rice Exporters Association of Thailand, the price of Thai white rice has increased from US$491 per ton on March 11 to $579 per ton on April 8. The cost of Thai jasmine rice has also climbed from US$693 per ton to $820 during the same period.

Other rice exporters, including India, the largest producer of the product, and Vietnam, the third most significant, are also being influenced by the outbreak of Coronavirus. The circumstances are leading to limited global supply and considerably more demand. India has ceased to export rice due to the lockdown, and Vietnam banned the export of the product to supply the local market.

A nationwide lockdown and the movement of migrant workers caused by the Coronavirus also affected Thailand. 

An ongoing drought is supporting the decline of agricultural production. In February, exports of agricultural products dropped by 3 percent.

 Food prices drop sharply in March except for rice

Demand-side contractions linked to the effects of the Coronavirus pandemic caused a decline in food prices. 

The FAO Food Price Index was down 4.3% from February. Abdolreza Abbassian, Senior Economist at FAQ, said that demand factors mainly drive the price drops. And ever-more deteriorating economic prospects influence the demand factors.

The FAO Sugar Price Index saw the most significant reduction. It was down 19.1% from the previous month. Control measures, imposed by lots of countries, lowered the demand from out-of-home consumption of sugar. Besides, a sharp fall in crude oil prices hit the ethanol demand. 

The vegetable oil price index dropped by 12%. The decline originated from the drop in palm oil prices, raising uncertainty over the Coronavirus impact on vegetable oil markets. 

Peter Thoenes, an analyst at FAQ, stated that oil prices dropped more than half during March. It had a substantial downward impact on biofuels, which are a significant source of demand in the sugar and vegetable oil markets.

The cereal price index dropped by 1.9% from February. By contrast, rice prices have been climbing for the third consecutive month.

At last week’s G20 summit, Qu Dongyu, Director-General of the FAO, said that the organization is closely monitoring rates and logistical issues for soft commodities. FAO intends to alert countries of emerging problems that could intensify potential disruptions. Besides, the organization wants to make sure agricultural trade contributes to global food security. They also want to avoid policies that hinder trade flows.