Global rice supply is set for a record year even as freight costs add a fresh layer to landed prices. The Food and Agriculture Organization lifted its 2025/26 world rice production forecast by 1.7 million tonnes to 563.4 million tonnes on a milled basis, a 2.1% rise from the prior year and the highest output on record. The upgrade points to comfortable availability for importers heading into the new marketing year, which should temper price risk for buyers planning forward purchases.
Production growth is broad based. Bangladesh, Brazil, China, India and Indonesia are expected to lead the gains, more than offsetting smaller crops in Madagascar, Pakistan, Thailand and the United States. Indonesia stands out, with output revised to a decade high after final government assessments showed a large expansion in harvested area. Thailand's estimate was also raised. The spread of gains across several origins gives buyers more sourcing options and reduces the risk that a shortfall in any single country tightens the global balance.
Prices tell a more mixed story. Benchmark rice traded near $11.33 per hundredweight, having risen about 13% over the prior month as broader grain markets firmed and conflict involving Iran lifted shipping costs. The war has pushed insurance premiums, container freight rates and fuel costs higher while disrupting shipping routes, all of which feed into the delivered cost of rice regardless of how large the crop is. Even with that monthly climb, the benchmark sits roughly 16% below where it stood a year earlier, so the longer trend still favors buyers.
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Forward indications lean lower. Market models point to rice trading near $11.33 by the end of the current quarter and easing toward $10.50 over the next twelve months, consistent with the record harvest working its way into available supply. For procurement teams, that combination of ample production and a softer price path argues against locking large forward volumes at current levels, while leaving room to cover near-term needs where freight exposure is high.
The practical read for buyers is to separate the crop story from the freight story. Supply fundamentals are easing and should cap price rallies through the year, but the cost of moving cargoes has risen on the back of route disruption and higher fuel. Importers exposed to Middle East shipping lanes face the steepest delivered-cost pressure and may benefit from sourcing closer origins or securing freight terms early. Tracking FAO supply updates alongside container and bunker costs gives the clearest picture of where landed rice prices head next, since the gap between farm-level abundance and delivered cost is where the real procurement risk now sits.
Senior Lead Analyst
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