Why is Rough Rice Valuable?
Rough rice is the whole rice grain that is harvested from the rice plant. It includes the hull, which is the hard protective covering that accounts for 20% of the grain’s size.
Also known as paddy rice, rough rice has a coarse consistency. It can be transformed into brown rice by removing the hull or white rice by removing the hull, bran layer and cereal germ.
Archaeological evidence shows that rice domestication began more than 8,000 years ago in the Yangtze Valley in China. The crop steadily proliferated to other regions, and by around 2,000 BC, the ancient peoples in the Ganges region of India were cultivating rice as a food source.
Today rice is a staple in the diets of more than half of the world’s population, especially in Latin America, Asia and the Middle East. Annual production of milled rice tops 480 million metric tons, which makes it the third most produced grain in the world after corn and wheat.
Rice is a member of the grass family (Gramineae). There are more than 10,000 species of grasses, and they grow worldwide in a variety of climates. (Other grass crops that grow primarily as agricultural crops for humans include corn, wheat, sorghum, barley, oats and sugar cane.)
How is Rough Rice Grown?
Most cultivated rice belongs to the grass species Oryza sativa (there is also a less common variety known as Oryza glaberrima). There are over 40,000 different varieties of Oryza sativa, but the majority of rice cultivated worldwide can be categorized into two main types: Japonica and Indica:
|Growing Climate||Temperate||Hot; tropical and subtropical|
|Growing Regions||Portugal, Spain, Japan, Italy and the United States (California)||Southern Asia, including Sri Lanka, India, Thailand, Vietnam and Southern China|
|Plant Characteristics||Narrow, dark green leaves, medium-height tillers and short to intermediate plant stature.||Broad to narrow, light green leaves and usually tall to intermediate plant stature. Plant is characterized by its abundant tillering.|
|Grain||Short and round and doesn’t break easily||Long and tends to break easily|
|Cooked Consistency||Sticky and moist||Fluffy - grains don’t stick together|
|% of Global Trade||More than 10%||More than 75%|
|Amylose (starch)||0 - 20%||23 – 31%|
The remaining 10 – 15% of the global rice trade consists of specialty varieties known as aromatic rice. Aromatic varieties of rice can be found in both the Japonica and Indica main types. Jasmine rice from Thailand and basmati rice from India and Pakistan are examples of these varieties. Aromatic rice sells at a premium in the marketplace.
Rice is cultivated in many diverse climates across the globe. As a result, four different growing methods have evolved:
- Irrigated: Primarily found in East Asia, irrigated farming supplies 75% of global rice production. Irrigated rice grows in paddy fields.
- Rain-fed Lowland: This farming method produces one crop per growing season and requires flooding of the rice fields with almost 20 inches of water. Growing regions include East India, Bangladesh, Indonesia, Philippines, and Thailand. Production is variable and inconsistent due to poor soil quality and drought and flood conditions in these regions.
- Upland: These farming zones are located primarily in Asia, Africa and Latin America. Upland rice fields are usually dry, and the land can be low-lying, drought-prone, rolling or steep. Upland rice plants are usually rotated or interspersed with other crops.
- Flood-prone: These farming zones are located mostly in South and Southeast Asia. Flood-prone zones are characterized by extreme flooding or drought conditions. As a result, yield is inconsistent and volatile. June to November is the rainy season in this region.
Rice production takes place in seven steps:
During this step, the soil is leveled and fields are plowed to prepare for planting. A key component of preparation is ensuring an adequate supply of water for the crop. Farmers surround fields with a water source controlled by dikes or levees. Pumps and reservoirs may be used to control the amount of water the crop receives.
Rice seeds are first soaked and then sown in flooded fields (or first in nurseries) either by machine or hand. Typical distribution is 15 to 30 seedlings per square foot.
Approximately three months after planting, the grains begin to ripen. The tops will droop and the stems will turn yellow. At this time, farmers drain water from the fields and begin the harvest. Sharp knives or sickles or mechanized harvester cut, thresh and stack the grains.
Machines that heat air or natural sunshine dry the grains to decrease moisture content to around 20%. Once dried, the grains are ready for processing.
Machines or farmers clean the grains and remove the hulls.
Brown rice requires no further processing. To produce white rice, mills remove the outer bran layers and polish the remaining grain. They may coat it with glucose to increase its shine.
During this step, the white rice grains are processed further to restore vitamins and minerals back into the finished product.
Global rice production is heavily concentrated in a small number of countries. China and India produce more than half of the annual global output, and the top five producers supply more than 70% of the global supply of rice.
Top 10 Rice Producing Countries
|Rank||Flag||Country||Rice Produced (Thousand Metric Tons)|
Top 3 Uses of Rice
|Uses Of Rough Rice||Description|
|Food staple||Rice is a staple food in many countries, particularly in Asia, Latin America and the Middle East.|
|Beverages||Rice milk and the Japanese alcoholic beverage sake are two examples|
|Biofuels||Straw from rice is increasingly being used in the production of renewable energy.|
Where Can You Trade Rough rice?
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What Drives the Price of Rough Rice?
The price of rice is most dependent on the following factors:
- China and India Demand
- Trade Policies
- Crude Oil Prices
China and India Demand
Any discussion of rice prices inevitably centers on China and India. Although these two countries are the main producers of the commodity, they also combine to consume about half of the world’s supply of rice.
There are two possible scenarios to consider. As the population in India and China increases, their demand for food will grow. This could help boost rice prices.
However, as these countries grow wealthier, they are also likely to adopt Western dietary norms. This could mean increased consumption of meat and other Western foods such as pasta and bread. Since rice has traditionally been viewed as a cheap source of food, its consumption may decline. Investors in rice should keep careful tabs on consumption patterns in these two countries for clues about future prices.
Rice inventories can offer key information about supply surpluses and shortages.
In recent years, China has been stockpiling more rice. While other countries including India and Thailand have diminishing stockpiles, these decreases pale in comparison to the size of China’s increases.
Elevated stockpiling by the world’s largest consumer should be a troubling sign for prices. As these inventories increase, it lessens the chances for a supply shortage and increases the chance for a supply overhang on the market.
As with all agricultural commodities, climate plays a key role in determining rice supply and prices. Rice production, in particular, is highly sensitive to the availability of an ample water supply. Drought conditions in major rice-producing regions could create shortfalls in supply and lead to higher prices.
Rice traders should pay close attention to precipitation levels and temperatures in key growing regions.
Policies that affect the importing and exporting of rice have a significant effect on prices.
India, for example, has placed limits or bans on rice exports in the past. Fears that these policies could resurface have the potential to create price spikes.
Crude Oil Prices
Rice production is an energy-intensive endeavor.
Large-scale production requires machinery to irrigate fields and control water levels. During the harvest, mechanized cutters cull the crop, while other machines dry the grains. Each step of the process requires energy consumption. As a result, a rise in crude oil prices can make rice more expensive.