Japan rice prices expected to fall due to high inventories

TOKYO: The June index forecast for rice prices over the next three months fell 4 points from the previous month to 19, remaining below the 50 threshold for the ninth consecutive month amid elevated inventories and discount sales, rice association data showed Monday, Kyodo News reported.

The index calculated by the Rice Stable Supply Support Organisation matched the record low seen in August 2014, when inventories swelled following a bumper crop the previous year.

Based on a nationwide survey of producers, wholesalers and retailers, a reading below 50 indicates that expectations for lower prices are dominant.

The rice supply and demand index for the next three months remained largely unchanged, rising 1 point from the previous month to 20, amid a prevailing view that supply and demand conditions will ease.

When asked what informed their views on prices, as well as supply and demand, 58% of respondents cited “domestic inventory levels”, while 23% cited “rice procurement conditions”.

According to the ministry of agriculture, forestry and fisheries, private-sector rice inventories had risen 51% from a year earlier to 2.23 million tonnes as of the end of May, reaching a level on par with the record high recorded in 2014.

Rice prices began to surge in the summer of 2024 after extreme summer heat reduced the previous season’s harvest, with the average price spiking to over ¥4,000 (US$25) per 5kg from around ¥2,000 before the supply shortages.

Prices have been declining since the government began releasing stockpiled rice, including through direct contracts with retailers, last year.