Floods now submerging large swathes of Paraguay's agricultural land and disruptive, heavy rain elsewhere in South America's rice growing regions are raising concerns about the development of the 2024 harvest.

South American rice stocks are now thin, driving up their price to the extent that Brazil is now importing at least one 30,000 mt shipment of rice from Thailand to boost domestic supply.

Any weather-related damage to the crop or delays in its harvesting could thwart efforts to rebalance the market and capture more international trade as global rice prices hover at multi-year highs.

A report by Brazilian rice portal Planeta Arroz this week, citing the Paraguayan Federation of Rice Producers, said that as much as 54% of Paraguay's rice crop is at risk due to the extent of flooding.

An exporter in the country told S&P Global that the flooding was serious and that it would have an impact on production, but that predictions about losses fluctuated wildly and would still be influenced by upcoming weather trends.

"It will have an impact but how much, that is something I don't know. It will depend on the weather. Normally the rice goes up to get the light and photosynthesise but it can drown," the exporter said, acknowledging that based in the capital, Asuncion, they had yet to see the extent of the floods for themselves.

The source said that based on the information they had, they were optimistic that the harvest would begin on schedule, estimated to be around late January or early February. The origin is expected to be the first to replenish South America's rice stocks, with Brazilian, Uruguayan and Argentinian crops to come weeks later.

A source at a large international commodities trader told S&P Global that they expected most South American harvests to be gathered several weeks later than usual.

Brazil buys the lion's share of Paraguay's rice, providing a top-up to its own supply and to add some of it to the volumes it exports from Rio Grande do Sul state.

The flipping from La Nina to El Nino weather conditions this year means increased rainfall in southern parts of the continent and drier conditions further north. South American rice stocks were diminished faster than usual in 2023 by dryness that severely dented output from Argentina, largely excluding it from the export market just a few months after its harvest was gathered.

The Paraguayan exporter's producer contacts in southern Brazil told him that they were resuming planting that had been delayed by heavy rainfall. Similarly, in Argentina, one exporter told S&P Global that further sowing would take place there in hoped-for drier weather soon.

"There will be a lot of late planting in December," the Argentinian exporter said. "Rice fields are in either regular or good condition."

Source - https://www.spglobal.com