Last year, we highlighted the potential for a severe global rice shortage. A new report reveals that rice production this year could be at its lowest in decades.
A report by Fitch Solutions forecasts this year's global rice production will log its biggest shortfall in two decades. The deficit will be a major headache for countries relying on grain imports.
"At the global level, the most evident impact of the global rice deficit has been, and still is, decade-high rice prices," Fitch Solutions' commodities analyst Charles Hart told CNBC.
Sliding rice production in China, the US, and Europe is already causing grain prices to increase for 3.5 billion people, particularly in the Asia-Pacific region — this region of the world accounts for 90% of the world's rice consumption.
"Given that rice is the staple food commodity across multiple markets in Asia, prices are a major determinant of food price inflation and food security, particularly for the poorest households," Hart said.
Hart said this year's global shortfall would be around 8.7 million tons, the largest global rice deficit since 2003/2004 of 18.6 million.
As a result of tightening global supplies, rough rice futures trading on the CBoT recently peaked at $18 per cwt, the highest level since September 2008. Cwt is a unit of measurement for certain commodities such as rice.