Rice Price

 

Rice is an agricultural commodity, meaning it is a staple crop that is produced on farms to provide food for billions of people in the world.

 

Quick Overview of Rice

✔️An overview of rice and its history
✔️The cultivation and production of rice
✔️Investing in rice as an agricultural commodity
Drivers of the price of rice
The uses of rice

 

An overview of rice and its history

As an agricultural commodity, rice is categorised into the category of cereal grains, one of the six categories of agricultural commodities. Other crops in this category include barley, corn, oats, and wheat. The crops in this category are considered a primary food source for humans and animals.

The five other categories of agricultural commodities are:

• Oil seeds are primarily grown for their high oil content in order to extract edible oil from the seeds and to produce meals and feed for animals from the seeds after the oil is extracted. This category comprises crops like canola, cotton, palm oil, soybeans, and sunflowers.

• Dairy products include butter, cheese, milk, and whey.

• Meat commodities include:

• Feeder cattle refers to weaned calves with an approximate weight of between 272 to 363 kilograms (600 to 800 pounds).
• Live cattle are full-grown cattle, usually weighing between 544 to 635 kilograms (1 200 to 1 400 pounds).
• Once butchered the meat is classified as:
• Hides.
• Organs.
• Bones.
• Hooves.
• Lean hogs, referring to pork as a commodity.
• Pork bellies.

• Soft commodities describe commodities that are grown rather than extracted or mined. Examples of soft commodities are cocoa, coffee, sugar, and frozen concentrated orange juice (FCO).

• Miscellaneous agricultural commodities refer to commodities that do not fit into one of the other five categories. However, they are traded globally on well-developed commodity markets. This category covers commodities such as wool, lumber (also called sawn wood or timber), and rubber (a commodity obtained from latex which is produced from rubber trees, primarily the Brazilian rubber tree).

 

Rice terms

Rice, rough rice, and milled rice are terms used when dealing with rice as an agricultural commodity. This may confuse a potential investor because the terms are frequently used interchangeably. Hopefully, the following explanations will bring some clarity.

• Rough rice, specifically refers to the whole rice grain, including the hull, which is the outer protective covering, constituting approximately 20 percent of the grain. It is also called paddy rice. A paddy refers to a small field that is kept flooded to grow rice, especially in eastern and southern Asia.
• Milled rice is the result of the milling, a process in which the inedible hulls and bran layers are removed from the harvested rough rice.
• The term rice is used as a general term when dealing with crop rice. Although, it is also used at times when rough rice, milled rice, or other types of rice are discussed or referred to.

This article will throughout use the term rice in its general sense, except when a specific type of rice has reference.

 

A short history of rice

Archaeological evidence indicates that the domestication of rice started in central and eastern China. Although, historians are not unanimous about the date since when the crop has been cultivated in China, differing from 8000 to 5000 B.C.

From China, rice cultivation spread to the Philippines, Sri Lanka (previously Ceylon), and India, where people in ancient times were cultivating rice in the country’s Ganges region around 2000 B.C. The crop arrived in Japan approximately 300 years B.C.

According to tradition, rice was brought back from India by the soldiers of Alexander the Great to the Mediterranean region, around 344 – 324 B.C.

A country like Brazil and regions in the western hemisphere like Central and South America were introduced to rice by people arriving from Portugal and Spain, respectively.

Numerous sources mention that the cultivation of rice in the USA was started by enterprising colonists, quoting: ‘It began quite by accident when, in 1685, a storm-battered ship sailing from Madagascar limped into the Charles Town harbour. To repay the kindness of the colonists for repairs to the ship, the ship’s captain made a gift of a small quantity of “Golden Seede Rice” (named for its colour) to a local planter.’

Nowadays, rice is cultivated in most tropical and subtropical regions, from 53° North in China to 35° South in Australia. It is the third most-produced grain in the world after wheat and corn.

 

Interesting characteristics of rice:

• It is a monocot, short for monocotyledon, meaning it has one seed leaf.
• Depending on the specific type of rice, the leaves vary from narrow to broad. In terms of colour, the leaves can be green or light green.
• ‘The plant itself grows between 90 – 150 cm. The sheaths which enclose the leaves are smooth and hairless, with slim leaves of up to 30 cm long and 15 mm wide, according to Royal Botanical Gardens Kew.
• Rice is a cereal grain and a member of the grass family Gramineae, of which there are more than ten thousand species.
• The only two types of cultivated rice belong to the grass species Oryza glaberrima, known as African rice, and the grass species Oryza sativa referred to as Asian rice, of which the two types, Japonica and Indica, are mostly used to cultivate rice.
• The grain of the Japonica and Indica types can be described as follows:

 

• Japonica: Short and round which does not break easily. Sticky and moist when cooked.
• Indica: Long with the tendency to break easily. Soft and airy, grains do not stick together.

 

The cultivation and production of rice

As a semi-aquatic plant, rice requires an adequate supply of water to grow.

Depending on the climate, availability of water, and rice variety, different cultivation methods are used. For instance:

• Swamp rice, also referred to as rain-fed lowland rice

In this method, the rice must be planted in stagnant water, and it requires about 200 mm of rainfall per month or a similar quantity of irrigation. This method is applied in regions such as the eastern region of India, Bangladesh, Indonesia, the Philippines, and Thailand.

 

• Mountain rice or upland rice

This method of rice farming is primarily used in Asia, Africa, and South America, for example, in Brazil. Upland rice requires less water irrigation and rainwater, about 750 mm over a period of three to four months. Upland rice fields can be low-lying, rolling, or steep.

 

• Irrigated rice farms

These farms are primarily found in East Asia, supplying about 75 percent of the world’s rice production.

 

The size of a rice harvest depends on how effective water management is applied. Too much water affects the growth of the stems, while a lack of water when the plant is in bloom causes sterilisation of the small flowers, preventing the rice to germinate.

‘The optimal growing conditions are an average day-temperature of 20-30° C, with a night temperature over 15°C, fertile heavy soils, and a pH of 6.5-7,’ according to Feedipedia.

 

Rice-producing countries in the world

There are more than a hundred rice-producing countries in the world. Although, most of the global production takes place in Asia. Nine of the top ten global rice producers are countries in Asia, namely China, India, Indonesia, Bangladesh, Vietnam, Thailand, Burma (formally referred to as Myanmar), Thailand, the Philippines, and Pakistan. Brazil in South America is the only country outside Asia listed on the top ten list.

China and India combined to produce more than fifty percent of the world’s rice supply. The following figures regarding the production of milled rice were obtained from Statista.

In the 2020/2021 crop year, China produced 148.3 million metric tonnes, followed by India with 122.27 million metric tonnes. The two countries together produced 270 .57 million metric tonnes.

In comparison, Indonesia, the third major rice producer in the world, produced 35.3 million tonnes, while the production of the world’s tenth greatest producer, Brazil, amounted to 8 million metric tonnes. Besides China and India, the total production of the remaining top ten rice-producing countries was 157.58 million metric tonnes, about 58 percent of China and India’s combined total.

The USA occupies the eleventh position, while Nigeria is regarded as the top rice producer in Africa, followed by Egypt.

 

The cultivation (growing) of rice – from preparation to harvesting

The growing of rice includes several steps which can differ in the rice-producing countries and regions. Typically, the steps are field preparation, planting, growing and irrigation, and harvesting.

 

• Field preparation

The first step is to level the soil, preferably consisting of heavy clay and silt loams, and to plough the fields.

A crucial component of the preparation process is to ensure that the water source is enough to grow the crop. Methods used to provide enough water include, inter alia, pumps, and reservoirs, or to surround the rice fields with a source of water to control the amount of water necessary.

In the USA, farmers use advanced technology such as ‘precision GPS and laser-guided earthmoving equipment’ to prepare the rice fields, creating ‘uniform grades and slopes within fields, which decrease water use and increase productivity,’ according to the USA Rice Federation (USA Rice).

 

• Planting

Rice seeds are soaked before they are sown by machine or hand in either prepared beds or in flooded fields. When first sown in prepared beds (or nurseries), the seedlings are transplanted to a rice field, also called a paddy, after twenty-five to fifty days. However, the process to transplant seedlings is currently dwindling due to increasing labour costs.

Normally, fifteen to thirty rice seedlings are planted in an area of approximately 0.093 square metres (one square foot).

In developing countries like the USA, some farmers use an airplane or grain drill to plant the seed.

 

• Growing and irrigation

The growth cycle of the rice plant is normally between 100 to 210 days, depending on the climate and fluctuation of water levels. The normal pattern is between 110 and 150 days. In temperate climates, the average duration from planting to harvest is approximately 130 to 150 days.

As the rice plant grows, it produces numerous lateral shoots, called tillers.

During the growing process, farmers irrigate the rice fields with the method which suits the particular rice field or farm best.

Adequate irrigation during the growing season is necessary to ensure a successful harvest.

 

• Harvesting

At the end of the growth cycle, the rice plants begin to show signs of maturity: the flowers darken, the grains begin to ripen, appearing in long panicles on the top of the plant, the tops start to drop, and the stems turn yellow.

At this time, water is drained from the rice fields and harvesting gets underway.

Various methods are used to harvest rice, including sharp knives, sickles, and mechanised and sophisticated harvesters referred to as combines or combine harvesters, which are complex machines that both cut and threshes the grain, separating it from the rest of the plant.

 

The production of rice – from harvesting to enriching

• Drying

Harvested grains are either dried in natural sunshine or in drying facilities where forced warm air is utilised to gradually decrease the moisture content to an acceptable level which is around 20 degrees Celsius – the ideal temperature for storing the rice before the hulling and milling processes start.

 

• Hulling

Once dried, the grains are hulled, meaning labourers or sheller machines, also called hullers, clean the grains, and remove the inedible hulls (the outer protective shells). Hulling provides brown rice which still contains the bran layers surrounding the kernel.

Brown rice requires no further processing and is ready to be used. It is full of nutrients.

Brown rice is also known as unmilled rice or wholegrain rice.

 

• Milling

To produce white rice, the brown rice is milled by milling machines that rub the grains together under pressure, removing the husk, germ, and outer bran layers and ‘polish’ the remaining grain. The more the rice is milled, the ‘whiter’ it becomes.

The white rice may be coated with glucose to improve its shine.

White rice is also called polished, table, or milled rice.

 

• Enriching

During the milling process, white rice loses some of its nutritious properties. Hence, white rice is enriched with a thin coating of vitamins and minerals to replace some of the nutrients lost during the milling process.

Rice (white and brown) is classified according to its grain shape, namely long-grain, medium-grain, and short-grain.

 

• Long grain: The length of the grain is approximately three times longer than its width. Long grain rice is over 6 mm in length.

 

• Medium grain: Length is from 2.1 to 2.9 times longer than the width. Medium grain rice measures between 5 mm and 6 mm in length.

 

• Short grain: When rice is less than two times longer than it is wide, it is classified as a short grain. Short-grain rice is less than 5 mm in length.

 

Investing in rice as an agricultural commodity

Before you start to invest in rice, you have to do some groundwork, including:

• Decide on an investment strategy and plan

Questions to be answered are, among others:

 

• Do I want to use an active investment strategy of ongoing buying and selling, or a passive strategy, which is a long-term investment strategy to maximise returns by keeping buying and selling to a minimum?
• What is my willingness and ability to take investment risks?
• What portion of my investment portfolio should I allocate?

 

• Research

Research the rice market, rice as a commodity, and methods available to invest in rice.

 

• Create a budget

Decide how much of your money you are prepared to risk in your rice investment. Stick to it and determine the costs involved. Remember the golden rule: Never invest more than you can unworriedly afford to lose.

 

• Find a commodity broker

Make sure it is a regulated, professional, and trustworthy broker or brokerage. An experienced commodity broker will provide you with an investment platform to invest in rice, using available trading instruments. Such a broker will also provide valuable advice.

Bear in mind, that investing in rice is not as common as investing in shares of companies, so not all brokers will offer ways to invest in rice.

 

Some ways to invest in or trade with rice

There are several ways available for investors/traders to invest in or trade with rice as an agricultural commodity. Ways like rice futures, rice ETFs, and shares of public companies involved in rice production, to name a few.

 

• Rice futures

Rice futures, also called futures contracts, are traded on the Chicago Board of Trade (CBOT). A standard futures contract is 2 000 hundredweights (CWT), formerly known as centum weights, equalling 91 metric tonnes.

Simply put, a rice futures contract is an agreement to trade a specific quantity of rice in the future at a pre-agreed price.

Trading with futures can be complicated, costly, and not practical because a certain margin in a trading account has to be maintained and the contracts are physically settled by the delivery of the rice purchased.

 

• Rice exchange-traded funds (ETFs)

There are no ETFs that exclusively focus on rice as a commodity. Although, there are some ETFs that invest in a basket of agricultural commodities of which a certain percentage is allocated to rice. For example, the Elements Rogers International Commodity Index-Agricultural Total Return ETN (exchange-traded note).

 

• Shares of companies involved in rice production

Currently, there are no public companies that are solely involved in the cultivation and production of rice. However, investing in companies that manufacture machinery required for rice production or sell fertilizers and pesticides necessary in rice cultivation, is an option.

 

 

Drivers of the price of rice

• China and India’s supply and demand

Being the two largest suppliers as well as consumers in the world, what happens regarding the production and consumption of rice in the two countries, may affect the global price of rice positively or negatively.

For instance, rice is a staple food in both countries. As the populations of the two countries increase, the demand for staple food will grow, causing prices to increase. Contrarily, the increased use of Western foods such as bread and pasta may cause a decline in the demand for rice.

 

• Trade policies and logistic factors

Trade policies and logistic factors applied by the governments of the major global producers of rice can influence the supply and price of rice. For example, stockpiling of the commodity or bans and restrictions on the export of the product.

 

• Energy and transport costs

The cost of energy required to produce rice, as well as transport costs has increased during 2025 and the first five months of 2025, causing an unavoidable increase in the price of rice.

The dramatic rise in the price of crude oil because of Russia’s war in Ukraine and the subsequent sanctions imposed on Russia by the USA, and European, and other countries, has made rice much more expensive.

 

• Climate

Similar to other agricultural commodities, climate plays a vital role in the production, and consequently in the price of rice.

As mentioned, rice production depends on the availability of water. Drought in major rice-producing countries or regions could cause shortages in supply, triggering higher prices.

 

The uses of rice

About fifty percent of the global population, including most of East and Southeast Asia, uses rice as a staple food.

More than ninety percent of the global production of rice is consumed by humans, albeit in different types, such as white rice, brown rice, basmati rice, parboiled rice, and sushi rice, to name a few.

• White rice

Refer to ‘milling’ above under the topic ‘The production of rice – from harvesting to enriching.’

 

• Brown rice

See ‘hulling’ above under the topic ‘The production of rice – from harvesting to enriching.’

 

• Basmati rice

Rice with a distinctive smoky flavour and with exceptionally long and thin grains. Basmati rice is normally sold as white rice, but brown basmati is also available.

It is used to create dishes like pilaf and biryani.

 

• Parboiled rice

Parboiled rice, also called converted rice, is a type of rice that is soaked, steamed, and dried before it is hulled and milled. It contains more fibre, calcium, potassium, and vitamin B6 than normal white rice.

 

• Sushi rice

Sushi rice is produced by steaming and adding vinegar to Japanese short-grain white rice.

It has a sticky texture and a high starch content. It is called sushi rice because it is ideal to make sushi, a traditional Japanese dish.

 

Besides a dish on its own, rice is eaten in soups, side dishes, and main dishes.

Furthermore, rice is used in some noodles and breakfast cereals. It is also used to make sake, an alcoholic drink of Japanese origin.

The whole plant can be used to feed livestock.

 

Note: This article does not constitute investment, financial, or trading advice. Please obtain the advice of a professional and regulated commodity broker before making trading and investment decisions.