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Rice: current price, history, usage, chart

Updated on February 13, 2024

Rice. A word that is perhaps synonymous with Asian cuisine. Each of us has certainly had the honor of having it on our plate as a side dish. But today we will look at rice from a slightly different point of view. And that as an agricultural commodity that can be traded on the stock exchange. How can you trade rice? When is it worth buying and when, on the contrary, is it worth selling? This article will tell you that and much more.

Rice – properties and uses

CONTENT OF THE ARTICLE

Rice is an agricultural crop. More specifically, cereal. And one of the most important. It serves as the main source of food for more than ¼ of the people on Earth. It is typically grown in tropical regions. It is traditionally grown in Asia, Australia and Africa. 

It is a cereal grain and more than 20 different types of rice are known. But only a few of them are destined to appear on our table. We can name Setu rice and African rice. The other species are wild and are perceived as weeds. And so they are not welcome in the rice fields.

The main use of rice is of course food. Rice grains are nutritious. They contain proteins, fiber and carbohydrates. Jasmine rice, basmati or arborio are among the most famous and popular types of rice. But it’s not just a dish that can be made from rice grains. Alcoholic beverages are also made from it. Specifically, for example, rice beer and wine or arrack . Rice straw is then used to make cigarette paper.

And how is rice actually grown? You may have already seen a rice field in a documentary. They tend to be abundantly supplied with water. The ideal conditions for growing rice are warmth and proper humidity. The field is therefore flooded. And it was because of stagnant water that rice growers in Central Europe were blamed for the spread of malaria in the Middle Ages. These motionless bodies of water were considered an ideal place for mosquitoes to breed. Therefore, local residents were discouraged from growing rice.

History of rice

And where does the well-known rice actually originate? Probably in tropical areas of Africa and Asia. It has been growing here for about 4,000 years before Christ. The first evidence of domesticated rice comes from China. And that from the valley of the Yangtze River, where, according to archaeological findings, it was already cultivated roughly 9,000 years ago. So we can say that the original home of rice is precisely in China.

However, it gradually spread to the surrounding areas as well. For example to India. But even further. For example, during the Roman Empire, rice was already cultivated in Europe. In the 16th century, thanks to the settlers, it also reached the territory of America. And here rice cultivation flourished. This is because of the suitable climate that California offers, for example.

Despite the fact that the cultivation of rice has expanded almost all over the world, European and American residents have remained loyal to their traditional foods. Nevertheless, rice is a very important crop, which is consumed in huge quantities, especially in the regions of Asia. Just for comparison. While in Europe a single person eats approximately 3 Kg of rice per year, Asians consume several tens of rice per year.

How to trade rice

Now let’s move on to the rice trading itself. Rice as such can be traded on commodity exchanges. Here two sides meet. On the one hand, there are producers who want to sell the produced rice. On the other side are buyers who need to own physical rice. So that they can process it further. These are usually large corporations.

And since we assume that we now have the honor of small individual traders, let’s look at an alternative solution that will be more suitable for small traders. We are talking about CFD trading.

CFD trading

Contracts for difference or CFD trading is suitable for small traders because you are not buying an actual commodity. So when you trade CFD contracts and buy any quantity of rice, you won’t have to worry about how you will transport it. Not even with how you store it afterwards. It is simply a way of trading that made the market accessible even to small individual investors.

And how does CFD trading actually work? Don’t worry, it’s not science. Let’s imagine, for example, a situation where you are researching current events in the market. And you will find that the value of rice should rise in the near future. What are you going to do? You enter a buy position. This will “buy” the rice. If, on the other hand, the price should fall according to your calculations, you will instead enter a selling position.

Wondering how you can sell something you don’t actually own? You can’t. However, you will let the broker know that you are speculating on a drop in the price level. By entering one of these positions, you enter into an agreement with the broker that you are obligated to pay each other the difference between the purchase and sale price of the rice.

So it all depends on what state the value of the rice will be in when you enter the store and when you leave the store. If you guessed the development of the rice value correctly, the broker will pay you the difference. But if you speculated wrong, you will have to pay the difference between the individual prices to the broker. So whether you win or lose will depend on the accuracy of your estimate.

Beware of risks

As with any investment, there are certain risks that you may encounter when trading CFDs. The biggest risk in CFD trading is leverage. Therefore, we recommend that you always look at how much leverage you are trading with. Because the higher the financial leverage, the higher the risk.

And what is financial leverage? Financial leverage multiplies your resulting income and loss. So you may find yourself making good money very quickly. On the other hand, it can also happen that you lose much more than you invested in the business. The amount of financial leverage will then depend on the size of your margin.

And the risk also lies in choosing an unsuitable broker. Therefore, always choose carefully. It may happen that you come across a fraudster. And then you don’t have to wait for your money. Therefore, always be careful that you are choosing a trustworthy broker.

Investing in shares

Another option is to invest in the shares of such companies whose activities revolve around rice and its processing. The key to success is to find a broker who will offer you the shares of these companies. By purchasing classic shares, you become a shareholder of the company. And you can use certain advantages that come from owning the stock.

What are the benefits? The main one is certainly receiving the dividend. That is, a share of the company’s profit. It can be paid out at different intervals and can be of different amounts. Or none at all. There are companies that do not pay dividends to their shareholders. On the contrary, they use all their profit as an investment in their further development. And this increases the value of the company. And her shares. And another privilege that comes from owning a share is the right to vote at general meetings. This gives you the opportunity to indirectly influence the future direction of the given company.

How to begin

Now let’s see how you can get started with rice trading. First, it is important to find a broker that will suit your requirements. There are a plethora of different online brokers these days. However, there are risks associated with this, which we have already pointed out in this text. That is, fraudulent brokers. Therefore, be careful who you entrust your savings to. Go through enough reviews. And even the user ones.

After going through the terms and conditions of all the trusted brokers and choosing one that allows you to trade rice, offers a suitable trading platform as well as favorable fees, it’s time to educate yourself. Trading is not a lottery. So even before you enter a store, it’s a good idea to know exactly what you’re doing.

In addition to educational articles, videos and webinars, the broker itself will help you with this. By offering you a free demo account. Thanks to this, you can check whether the given broker, and especially its platform, will suit you. This gives you the opportunity to familiarize yourself with the platform even before you start trading in earnest. And, of course, you can also check whether your estimates on the price development of rice are correct.

What affects the price of rice

As traders of rice, you should be interested in what can sway the price of this commodity. Therefore, let’s look at several factors that can affect the value of this commodity. Since rice is an economic commodity, its price will of course depend on the size of the harvest. Therefore, rice traders should not underestimate the weather. Because if there is too much drought for a long time, we cannot count on the fact that the rice will do well.

Another thing that affects the price of rice is the economic and political situation in the world. So if one of the major rice producers decided to cut back on exports, the value of rice would suddenly rise. The same situation would also arise in the case of the imposition of customs duties or embargoes. Therefore, you should also monitor the geopolitical situation of major rice producers.

Rice – current online chart

See how the price of this commodity has evolved over time.

Development of interest in the commodity

The curve showing the development of the value of rice over time has a similar trend in individual years. This is due to the fact that the price of rice, like the value of any other agricultural crop, depends on, among other things, the season of harvest.

Rice – summary

So now you know all the essentials about rice. Above all, what are the possibilities of trading with this agricultural commodity. Now it’s up to you which rice trading options you choose. But before you start, be sure to try investing first with a test demo account.

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