Due to the restricted nature of the international rice market (less than 6% of global production) and to the residual character of exchanges (producing countries produce first and foremost for their own consumption), international prices are extremely volatile.
International market is not influenced by referential prices, or by "Chicago Board of Trade" (CBOT) futures quotations - which have no liquidity. There are few regular publications that indicate current price levels.
It is still possible to have an idea of the long-term evolution of rice prices by observing the market of Thai White Rice, 5% Broken. In fact, this type of rice was chosen as a reference for a futures market in Bangkok which is scheduled to open at the end of 2003.
Prices of Thai White Rice 5% Broken, in dollars per ton
Source : UNCTAD Secretariat from the Food and Agriculture Organization of the United Nations (FAO) and Osiriz data
It should be noted that there is a weak correlation between the high-quality low-quality rice markets. They often move in the same direction (e.g., both of them fell in 2000), however low-quality rice prices tend to fall more. The intensity of price fluctuations depends on specific demands for each type of rice.
In many countries, the only available prices are domestic ones which indicate the prices that buyers are willing to pay growers.
In the case of export prices, the correlation between the different origins is relatively high for those countries that do not interfere or regulate prices (see Economic Policies).
Export rice prices, in dollars per ton FOB until December 2010
Source: UNCTAD Secretariat from Osiriz data
The downward trend observed since the mid-1980s has continued into the new century. Stock markets explain most of this situation, particularly a reduced demand and an abundance of exportable surplus, notably in the Asian countries.
In the short-term, the possibility of some countries to be either an exporter or an importer increases rice price instability. In fact, some large producers are practically self-sufficient and can be, depending on the year, exporters, importers or both simultaneously. This leads to significant changes in traded volumes.
Other factors are important:
- Rice cultivation is highly susceptible to climate risks (e.g., irregularity of monsoons in Asia);
- There is a dichotomy between harvesting , which takes place 2 or 3 times a year, and consumption, which is spread throughout the year;
- Changes occur in the support programs and trade policies of main producing countries;
- The international market is often considered as being very limited ("narrowness");
- Exchange rates fluctuate;
- Oil prices fluctuate, and oil is often the main source of export income for many countries that import rice.