According to the Thai Rice Exporters Association, price of the 5% broken white rice — the industry benchmark — rose 12% from March 25 to April 1. Rice prices are now the highest since late April 2013, according to Reuters data.
The rise in prices is due to expectations of higher demand for Thai rice after fellow top exporters India and Vietnam both face export disruptions of the strategic staple food due to the outbreak of the coronavirus disease, formally known as COVID-19. Asia produces 90% of the world's rice supply and consumes the same amount.
In India, rice traders have stopped signing new export contracts as labour shortages and logistical disruptions hamper the delivery of existing contracts, Reuters reported, citing industry officials. The Vietnamese government meanwhile has put in export curbs.
Even before the March spike, rice prices had started climbing in late 2019 due to a severe drought in Thailand and strong demand from Asian and African importers. Thailand is the world's second-largest exporter after India and ahead of Vietnam.
The gain in prices comes despite expectations of robust production this crop year and carry-over stocks of rice and wheat being at all-time highs, said Samarendu Mohanty, Asia regional director at the Peru-based International Potato Center, a non-profit group researching food security.
The Thai Rice Exporters Association assured in a weekly report that rice stocks are ample, but acknowledged difficulties in procuring labor amid the virus outbreak as Cambodian laborers head home due to a nationwide lockdown.
That could make seasonal farming activities difficult and hit future harvests, said Mohanty in a blog post.
"Unlike other sectors, agriculture is heavily affected by the timing of the lockdown rather than the duration because of the strict planting and harvesting calendar," he wrote last week. "If the planting season is missed, there will be no crop for the season or for the entire year."
In other parts of the world like India and other South Asian countries, it is now harvest time for winter crops such as wheat, potato, cotton and some fruits and vegetables. Farmers need migrant workers to operate machinery and perform other manual work like loading and unloading the produce.
"Although import buying of some commodities has accelerated in recent weeks, logistical challenges are being reported as movement constraints and quarantine measures become widespread," the International Grain Council said in a recent report. It also acknowledged a sharp upturn in near-term demand, especially for rice and wheat-based foods.
It's not just rice, prices of wheat — a staple grain used to make pasta and bread — have also risen recently.
The price of wheat futures also rose about 15% in the second half of March due to panic buying by consumers and crop concerns arising from lockdowns in North America and Europe.
Rice and wheat prices will remain supported in the coming weeks, said Fitch Solutions in a note.
"Supply is currently tightening due to the impact of the Covid-19 (coronavirus) pandemic on demand and trade as well as to the aftermath of bad weather in key producers (severe drought in South East Asia and Australia)," said Fitch Solutions.
Although prices of wheat and rice are currently low in absolute terms as compared to historical averages, they are still significantly higher on-year, it noted.
"This implies food price inflation will accelerate further in 2020, continuing on from 2019 when the African Swine Fever outbreak led to a prolonged spike in meat prices," it added.
Food industry associations and organizations are urging countries to keep trade open.
"One cannot blame countries for ensuring their domestic food security during this trying time, but countries need to be extra careful in taking unnecessary policy measures that could create panic in the market," said Mohanty. "Countries should be aware that enough grains exist in warehouses to feed the world for more than four months. But these grains are of no use if countries resort to trade restrictions."