Key Highlights

  • Rice futures traded above $13 per hundredweight, their highest level since June 2025.
  • World milled rice inventories reached a record 196.2 million tonnes at the start of 2026.
  • A strong El Niño is expected to develop across key producing regions, raising climate risk to the crop.

Rice futures have climbed above $13 per hundredweight, marking their highest level since June 2025, in a move that appears at first glance to contradict the market's own supply data. Global rice inventories are not tight — quite the opposite. World milled rice stocks reached a record 196.2 million tonnes at the start of 2026, following a string of strong harvests led by top grower India. Yet prices are rising anyway, driven by a forward-looking risk that has little to do with current stock levels.

That risk is climate. Analysts expect a very strong El Niño to develop over the coming months across key producing regions in Southeast Asia and parts of the Southern Hemisphere, and rice is widely viewed as the crop most vulnerable to the weather pattern's disruptive effects on rainfall and temperature. Because rice cultivation is highly water-dependent and concentrated in specific climatic zones, the prospect of a strong El Niño carries outsized implications for future production, even against a backdrop of currently abundant supply.

India's position illustrates the scale of the current supply cushion. The country's rice stocks climbed to an all-time high of 68.4 million tonnes in June, giving the world's top rice grower substantial capacity to buffer any near-term production shortfall. Indonesia, a major rice importer, is similarly sitting on record stockpiles, with farmers there speeding up planting specifically to mitigate anticipated El Niño risks before the weather pattern fully takes hold. In Thailand, inventories stand at their highest level in a decade, with fresh second-crop arrivals expected from late July, adding further near-term supply cushion.

Despite this considerable buffer, the market is choosing to price in the forward risk rather than rely purely on current abundance, a pattern common in agricultural commodities where climate events can rapidly and unpredictably alter production outcomes across an entire growing season. Renewed geopolitical tensions in the Middle East have added a further layer of concern, with the risk of disruptions to commodity shipments through the Strait of Hormuz representing an additional, if less direct, source of uncertainty for global rice trade logistics.

The combination of record stocks and rising prices leaves rice markets in an unusual position heading into the second half of the year: well-supplied for now, but increasingly focused on how a developing El Niño could reshape the production outlook across Asia and the Southern Hemisphere in the months ahead.