Economy 2025, forecast 2026: World rice prices continue to face pressure

  The global rice market for the 2025–2026 crop year is in a particularly unusual phase in decades: supply is at record highs, inventories are accumulating heavily, and there is persistent downward pressure on prices.

The core driver of this trend comes from historically high rice production in India, which has risen to become a dominant center for both global rice supply and demand, as well as its pricing.

Price pressure on the global rice market.

According to the latest forecasts from the United Nations Food and Agriculture Organization (FAO), world rice production in the 2025–2026 crop year is expected to reach approximately 556.4 million tons, a significant increase compared to the previous crop year and setting a new record high. Due to large beginning stocks, total global rice supply is estimated at 767.2 million tons, the highest in history.

In this overall picture, India emerges as a key player. Its rice production is projected to reach 151–152 million tons, far exceeding traditional rivals such as China, Thailand, and Vietnam. This enormous supply not only ensures domestic food security but also creates unprecedented export potential, laying the foundation for India to become a new "price anchor" for the global rice market.

The increase in production is occurring against a backdrop where consumption growth is not keeping pace with supply. The FAO forecasts global rice consumption in the 2025–2026 season to reach approximately 550.8 million tonnes, a record high but still significantly lower than total production and available supply.

As a result, global ending inventories are projected to rise to an all-time high of 215.6 million tons. India alone accounts for a significant portion of this inventory, thanks to its aggressive stockpiling policies and successive bumper harvests.

The global inventory-to-consumption ratio is projected to remain at a favorable level of around 38.7%, reflecting a very high degree of "safety margin" in the market. For the group of major exporting countries, this ratio also increased slightly to nearly 32%, indicating that the supply to the international market remains abundant in the medium term. This large surplus-inventory structure is creating systemic downward price pressure, rather than just short-term seasonal fluctuations.

2025 witnessed a significant decline in rice prices on the international market. The FAO's Global Rice Price Index (FARPI) fell by nearly 20% year-on-year, with a further 1.5% drop in November alone.

The price of Indian 5% broken white rice – a key benchmark – fell to around $338 per ton in early December, its lowest level in years. Meanwhile, prices for similar rice from Thailand and Vietnam, while still higher, are also under increasing pressure, forcing exporters to constantly adjust their prices to maintain competitiveness.

According to market sources and analysis from S&P Global Platts, the current price decline is likely not over yet, as new supply from India continues to enter the market and buyer sentiment remains cautious.

The "market valuation" factor

India's role in fiscal year 2025–2026 extends beyond production scale, encompassing governance policies and export strategies, shifting its role from "regulator" to "price setter".

India's imposition of export restrictions during 2022–2023 caused global rice prices to surge. Conversely, the country's gradual easing and removal of these restrictions from the end of 2024 is having the opposite effect: driving world prices down.

In particular, the possibility of the Indian government releasing its stockpiles through the Open Market Sales Scheme (OMSS) in 2026 is considered a key factor. If OMSS is implemented on a large scale, the market could receive millions of tons of rice, increasing pressure on the export prices of rival countries.

Against the backdrop of a weakening rupee, the cost advantage of Indian rice is further amplified, solidifying the country's position as a dominant low-cost supplier in the global market. The availability of inexpensive rice from India is reshaping global rice trade flows. Many traditional importing markets in Sub-Saharan Africa, the Middle East, and South Asia are increasing their purchases of Indian rice due to its competitive pricing and stable supply.

Sub-Saharan Africa continues to be a major driver of rice trade growth, accounting for nearly one-third of total global imports. The FAO forecasts that imports to the region could rise to nearly 19.5 million tonnes in 2025, as domestic supply remains limited.

Conversely, some major importing countries such as Indonesia and the Philippines are tightening imports to support domestic farmers, contributing to a more competitive market and strong regional differentiation.

India's strong rise is putting other traditional exporters in a difficult position. Thailand: Rice exports in the 2024-2025 crop year are expected to plummet to around 7.5 million tons, the lowest level in years, due to fierce price competition; Vietnam: While maintaining its position thanks to high-quality rice and the mid-to-high-end segment, it is also facing downward price pressure amid market oversupply; Pakistan and Myanmar: Forced to lower their selling prices to maintain market share in price-sensitive markets.

In the short term, these countries may have to accept lower profit margins while strengthening their product differentiation strategies, focusing on fragrant rice, specialty rice, and high-value markets.

Outlook for 2026: Persistent oversupply, prices unlikely to recover strongly.

Current forecasts suggest that the oversupply trend is likely to continue into 2026. Global rice prices are projected to remain under pressure for at least the first quarter of 2026, unless major weather or policy shocks occur.

Samarendu Mohanty, a senior economist formerly at the International Rice Research Institute, believes that “the downward price trend will continue because India is producing too much rice. Prices in India could fall by another 10-15% due to oversupply and weak foreign demand.”

India is expected to continue its role as a global price anchor, while its decisions regarding exports, stockpiles, and OMSS will be decisive for market trends. Despite the very positive supply outlook, the rice market still faces several risks: Climate change: Extreme heat, water shortages, and El Niño could disrupt production; Trade policy: Unexpected export restrictions could reverse price trends; Logistics and geopolitics: Transport bottlenecks and global trade tensions could increase costs.

Overall, the period of 2025–2026 marks a major turning point for the global rice market, with unprecedented abundant supply and an increasingly prominent central role for India. In the short term, consumers – especially in food-scarce countries – will benefit from low prices. However, pressure on farmers' and exporters' incomes necessitates urgent restructuring of production, value enhancement, and sustainable development.

Against this backdrop, the global rice market is entering a new cycle where scale, cost, and policy—more than ever—are becoming the determining factors in the trade order of the coming years.

Source: Tin Tuc News