India may harvest much less rice. Record stockpiles are protecting exports

Lower rainfall is hurting this year’s harvest

Rice production in India may fall for the first time in a decade and by the largest margin since the 2009/10 season. This year’s harvest could be about 10 million metric tons lower than last year, when production reached a record 154 million metric tons. That would represent a decline of nearly 6.5%.

The main problem is below-normal rainfall during the crops’ ripening period. Since the start of the monsoon in India, rainfall has been on average 15% lower than usual, and in some rice-producing states, the shortfall reaches 42%. As of September 11, summer rice crops covered 42.68 million hectares, nearly 4% less than a year earlier. This is significant because these crops account for over 80% of the country’s total rice production.

Prices are rising, but stocks remain very high

Expectations of a weaker harvest have already begun to affect the market. Rice prices in India are rising, and export prices have reached their highest level in over a year. At the same time, lower water levels in reservoirs may also limit the area planted with winter rice.

Stocks remain a major safety net. As of September 1, government rice reserves, including paddy, stood at a record 59.6 million metric tons. This is significantly higher than the government’s October 1 target of 10.3 million metric tons. Such high stock levels should allow India to maintain exports despite weaker production and avoid restrictions on foreign sales.