Rice stocks on the boil after forecast of biggest shortfall in yield in two decades

Shares of rice producing companies notched strong gains on April 19 following a report by research agency Fitch Solutions that said the global market for the commodity will log its biggest shortfall in two decades this year.

Rice production has been falling across the globe due to rising temperatures and the supply disruptions in the last few years because of the Russia-Ukraine war and the Covid pandemic, while sanctions on Moscow just made matters worse. Rice prices shot up sharply as a consequence of this and, according to the recent Fitch Solutions Country Risk and Industry Research report, the rice prices are likely to remain notched around the present highs till 2024.

As India is the top exporter of rice, expectations of high prices sustaining for a longer period aided the sentiment for domestic rice producers. As a result, shares of KRBL, LT Foods and Kohinoor Foods sharply moved higher in trade today.

At 12.24pm, shares of KRBL were trading 8.29 percent higher at Rs 371.60 and those of LT Foods were up 4.92 percent at Rs 103.40 on the National Stock Exchange. Shares of Kohinoor Foods were trading at Rs 30.80 on the NSE, with 4.94 percent gains from the previous close.

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In September of last year, India implemented measures to control the prices of rice in the domestic market due to concerns over lower production caused by below-average monsoon rainfall in key growing states. These measures included banning of broken rice exports and the imposition of export duties on other grades of rice.

Despite these restrictions, India still managed to achieve a record 22.26 million tonnes of rice exports in 2022, reflecting an annual growth rate of 3.5 percent. This figure surpassed the combined shipments of the four other leading rice exporters, namely Thailand, Vietnam, Pakistan, and the United States.