Global Rice Market Heats Up Due to El Niño, Is Indonesia Still Safe?

Global rice prices began to rise again in trading on Tuesday (23/06/2026). Benchmark rice contracts reached US$12.48 per hundredweight (cwt), a 2.21% increase from the previous day, bringing prices to their highest level in over a week.

The market is responding to increasing weather risks in Asia. Several major producers in Southeast Asia are facing threats from El Niño patterns, which are expected to trigger hotter and drier conditions in the coming months. The Philippines has already warned of a potential decline in paddy production by up/to 700,000 tonnes, or approximately 3.5% of its annual production target.

These concerns arise while the global supply chain remains overshadowed by uncertainty in the Middle East. Shipping traffic in the Strait of Hormuz has not yet fully normalised, keeping energy and fertiliser supplies expensive. For farmers, production costs are rising, and the market has factored these risks into rice futures pricing.

However, the global supply situation is not yet critically tight. India, the world’s largest rice exporter, currently holds government rice stocks of 68.43 million tonnes as of 1 June 2026. This figure is a 15% increase compared to the same period last year and is more than five times India’s official government reserve requirement for early July. These large stocks are acting as a buffer against rising global prices.

Trade data also shows that international demand has not been overly aggressive. Thailand’s rice exports from January to May 2026 fell by 10.75% compared to the same period last year. This situation keeps global rice prices approximately 8% lower than last year’s position, despite recent strengthening.

In Indonesia, the narrative is different. While global markets worry about production, Indonesia is enjoying an increase in supply. The Central Bureau of Statistics (BPS) noted that national rice production in 2025 reached 34.69 million tonnes, an increase of approximately 4 million tonnes compared to the previous year.

The Food and Agriculture Organization (FAO) has even positioned Indonesia as the largest rice producer in Southeast Asia for the 2025/2026 season. According to the FAO Food Security Snapshot report dated 29 January 2026, the production prospects for paddy and maize in Indonesia for 2026 are considered quite good. The first paddy harvest, which contributes about 55% of annual production, is expected to begin in February 2026, with planting areas exceeding the five-year average. Favourable weather conditions in Java, the nation’s primary production hub, and government support through subsidised fertiliser are key drivers.

Nevertheless, the FAO noted several disruptions in Sumatra. Lower-than-normal rainfall in late 2025 hindered planting and crop growth in certain areas. In Aceh, North Sumatra, and West Sumatra, floods and landslides in late December 2025 and early January 2026 caused land damage, loss of food stocks, and disruptions to infrastructure such as roads and bridges.

The FAO also reported that Indonesia’s paddy production throughout 2025 reached approximately 59 million tonnes, about 9% above the historical average. This increase was driven by the expansion of planting areas and good yields due to generally favourable weather. Maize production for 2025 is estimated to reach 15.3 million tonnes, about 5% above average, driven by high demand from the domestic poultry industry.

Regarding trade, the FAO estimates that Indonesia’s wheat import needs for the 2025/2026 marketing year will reach 11.5 million tonnes, approaching a record high, driven by population growth and increasing consumption of wheat-based products. Meanwhile, maize imports are projected to reach 1.5 million tonnes, driven by sustained demand from the livestock feed industry.

Government reserves are also at unprecedented levels. The Government Rice Reserve (CBP) managed by Bulog has surpassed approximately 5.2 million tonnes, a figure the government describes as the highest in history.

However, this abundance of supply has not yet fully reflected in consumer prices. BPS noted that the national average price for medium-grade rice in the third week of June reached Rp14,402 per kilogram, while premium rice stood at Rp16,230 per kilogram. Both remain above the maximum retail price (HET) set by the government. The number of regencies and cities experiencing rice price increases has grown from 110 to 130 regions.

Daily data from the Ministry of Trade (SP2KP) shows that the national weighted average price for medium rice rose from Rp13,809 per kilogram on 19 June to Rp13,818 per kilogram on 22 June. Premium rice moved from Rp15,473 to Rp15,475 per kilogram during the same period. While the increase is slight, the trend remains upward.

This situation demonstrates that the current rice issue in Indonesia does not lie in the availability of national stocks. Production is high, Bulog warehouses are full, and Indonesia’s position on the global production map is strengthening. The next challenge lies in how this abundant supply can be more rapidly translated into more stable prices for consumers.