Middle East Escalation Roils Global Shipping

Why it matters

The strengthening Thai baht is creating significant headwinds for rice exporters, making Thai rice more expensive than its competitors. The baht is currently fluctuating around 31 THB to the US dollar, while exporters argue an exchange rate of 33-34 THB/USD is needed to remain competitive. This appreciation has contributed to a 17.5% drop in export volume in January 2026 compared to the previous year. India, the world's largest rice exporter, has recently lifted most of its export restrictions, leading to a surge in global supply and a drop in prices. After banning non-basmati white rice and imposing duties in 2023, India removed these restrictions in late 2024, causing its exports to rebound close to record levels in 2025. This policy shift has intensified price competition among major producers. Vietnam is strategically pivoting its rice industry, planning to reduce export volume from 8 million tons in 2025 to 7 million in 2026, with a long-term goal of 4 million tons by 2030. This move is part of a national strategy to focus on higher-quality, higher-value rice and target premium market segments rather than competing on volume. In Europe, demand is growing for premium, specialty, and sustainable rice varieties. The European rice market is projected to reach over USD 1 billion by 2033, with the aromatic rice segment, including jasmine, expected to be the fastest-growing. There is a clear trend towards organic and sustainably certified rice, driven by health-conscious consumers and EU policies promoting sustainable agriculture. The European Union maintains strict import regulations, particularly concerning food safety, pesticide residues, and traceability. For example, consignments of rice products from China require certification of being free from unauthorized GMOs. Basmati rice from India and Pakistan needs an authenticity certificate to qualify for preferential import tariffs. Navigating currency volatility remains a critical challenge for exporters. The Thai Baht to Euro exchange rate has seen fluctuations, impacting profit margins for exporters targeting the European market. The recent conflict has also heightened concerns about currency volatility, particularly for trade with Middle Eastern countries. Food industry publications read by European buyers emphasize sustainability, traceability, and compliance with EU regulations. Importers prioritize suppliers who can provide certified organic or pesticide-free rice and demonstrate robust quality control from farm to fork. Understanding these buyer priorities is key to positioning premium Thai rice in the competitive European market.

Key numbers

• Shippers now face reroutes around Africa adding 15-20 days, spiking freight and insurance costs.
• The baht is currently fluctuating around 31 THB to the US dollar, while exporters argue an exchange rate of 33-34 THB/USD is needed to remain competitive.
• This appreciation has contributed to a 17.5% drop in export volume in January 2026 compared to the previous year.
• After banning non-basmati white rice and imposing duties in 2023, India removed these restrictions in late 2024, causing its exports to rebound close to record levels in 2025.

What happens next

• This move is part of a national strategy to focus on higher-quality, higher-value rice and target premium market segments rather than competing on volume.
• The European rice market is projected to reach over USD 1 billion by 2033, with the aromatic rice segment, including jasmine, expected to be the fastest-growing.

Sources

• Moody's warns
• already grappling
• The strengthening Thai
• The baht is currently
• This appreciation has
• India, the world's largest
• This policy shift has
• Vietnam is strategically
• This move is part of
• In Europe, demand is
• The European Union maintains
• For example, consignments
• Basmati rice from India
• The Thai Baht to Euro
• The recent conflict has
• Importers prioritize
• Understanding these buyer

Quick answers