Wheat prices rise more than rice

A shift in replacement demand to rice as a result of the Ukrainian crisis leading to higher wheat prices is having an impact on countries’ food purchases.

Statistics from the U.S. Department of Agriculture showed that the average price of wheat in Kansas City, a distribution center for U.S. agricultural products, rose to $454 per ton in March, up 25 percent from the previous month. Exceeded the price of rice produced in Thailand in March ($425). Rice produced in Thailand accounts for more than 10% of world exports, which is one of the international indicators of rice prices.

In Canada, a major wheat producer, the price of wheat is also higher than that of rice. Statistics from the U.S. Department of Agriculture show that the price of wheat in major exporters surpassed that of rice, only for a brief period in 2007-2008, when the world was in a severe food crisis. Wheat exports from Russia and Ukraine plummeted, leading to a rise in global wheat prices.

Wheat exports from Ukrainian ports fell to 167,300 tonnes in April, down about 80 percent from the same month a year earlier, data from financial information firm Refinitiv showed. Wheat is exported from the Black Sea region at lower prices, and the Middle East and Africa, where purchasing power is low, import heavily.

Countries that rely on imports of wheat will turn to rice and other substitutes. In sub-Saharan Africa, Nigeria consumes the most rice. There are forecasts that consumption will increase by 15% in 2022-2023. Noriko Ito, director of research at Japan’s Institute of Agriculture, Forestry and Fisheries Policy, pointed out that “Nigerian nationals are very sensitive to the price of wheat products, and there are many types of staple foods, so it can be considered easier to switch to cheaper food.” The country’s wheat imports are expected to rise just 4 percent from the previous fiscal year, while rice imports are expected to rise 12 percent.

In Japan, rice, whose prices have remained stable compared to wheat, has also received attention. The market for packaged rice is expanding, and rice flour bread is also attracting attention. Japan’s Ministry of Agriculture, Forestry and Fisheries has raised the price of wheat imported by the country and sold to milling companies and others since April. This is putting pressure on prices for breads made from wheat flour, etc.

China will also increase rice imports. As a substitute for wheat and maize, the import of broken rice for use in feed will increase substantially. There are forecasts that Indonesia, which is expected to suffer from a reduction in rice production, will also increase imports.

From the perspective of supply, Thailand’s rice exports have increased significantly. Thailand’s rice exports from the beginning of the year to April 3 totaled about 1.48 million tons, up 84 percent from a year earlier, according to the U.S. Department of Agriculture. The office of the Agriculture Counsellor at the Thai embassy in Japan said that “importing countries may be building up their inventories as the crisis in Ukraine may cause transport disruptions”.

In its April report, the U.S. Department of Agriculture noted that “countries that rely on wheat as their staple food may struggle to change their habits quickly, but countries that consume both wheat and rice see lower prices and may opt for rice.” Some people believe that this is a temporary phenomenon before the price of wheat falls, and countries will take countermeasures to avoid food problems.