Rice crop should have a break this year: what happens to prices?
- May 31, 2022
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Climate change harms plantations in Rio Grande do Sul, which accounts for 70% of Brazilian production, and the war in Ukraine puts pressure on the global market
Above-average temperatures in the summer of this year are likely to cause a crop failure rice of 9% in Rio Grande do Sul, responsible for 70% of the cereal production in the country, according to the National Supply Company (Conab). The latest bulletin from the consultancy Agro Itaú BBA, from Banco Itaú, obtained exclusively by EXAME, points out that weather phenomena that reached the south of the country harmed the volume of the harvest and the quality of the rice to be delivered to the industry. Losses occurred mainly in the West Frontier and Campanha regions.
With the end of the harvest approaching, it is now possible to estimate the results of the current crop. Total production is expected to reach 10.6 million tonnes, around 8.5% less than last season. “With the devaluation of the real, competitiveness for exports increased and stimulated foreign sales of the cereal, temporarily drying up the market”, in the consultancy’s view.
You consumer prices increased by 21%, on average, at the beginning of the year, in a rare upswing in the period. In the international market, the increase was 2%, according to the Center for International Cooperation in Agronomic Research for Development (Cirad) in France. THE war in ukrainewhich disrupted the global grain market, led importers of corn and wheat to seek more rice to make up animal feed, according to the organ, raising the global price of the food.
The good news is that harvest in United States must be record, reaching 765 million tons. As a result, the world balance sheet tends to become more comfortable, in Itaú’s view. “If we consider rice prices in Vietnam, there was a 4% rise in local prices in April compared to February 2022, however, if we consider the same period last year, the cereal is 14.9% below the value that was traded ”, analyzes the bank. “In Chicago, however, the price of paddy rice has gained strength in recent weeks due to the dry climate and the reduction of the cereal area”.
For the 2022/2023 crop in the United States, which started to be planted, the projection is for a reduction of around 4.7% compared to the previous cycle, which also helps to explain the increase in prices on the stock exchange. Chicago. In the Asian market, upward movements have also been observed “due to the increase in logistics and fuel costs and the appreciation of local currencies”, according to Itaú.