Rice Market Monitor, December 2009
The Rice Market Monitor provides an analysis of the most recent developments in the global rice market, including a short-term outlook. Presently, the full document is available only in English but highlights are available in Spanish and French.
December 2009, Volume XII - Issue No. 4
ROUND-UP
FAO’s forecast of global paddy production over the 2009 season has been lifted by nearly 10 million tonnes to 678 million tonnes, 2 percent below 2008’s crop, but still the second highest production on record. The revision to the global production outlook principally reflects better than previously anticipated results in many Asian countries, where overall paddy production is now forecast at 612 million tonnes, some 12 million tonnes below 2008. The contraction was mainly caused by adverse weather, especially drought, which particularly hit crops in Bangladesh, India, Pakistan and Nepal. By contrast, very strong gains are expected in China mainland, Indonesia and Myanmar. Production prospects are negative in Africa, where 24.5 million tonnes are forecast to be harvested, 3 percent less than the previous year. The decline would be driven by a cut in plantings in Egypt, but also reflect rainfall deficits in Chad, Mauritania, Niger and the United Republic of Tanzania. By contrast, satisfactory growing conditions coupled with continued support to the sector, often under government self-sufficiency programmes, are expected to boost production in the rest of the region, with particular gains anticipated in Madagascar, Mali, Nigeria and Senegal. The 2009 outlook remains favourable in Latin America and the Caribbean, where output is estimated to rise by 4 percent to 27.4 million tonnes. A milder hurricane season in Central America and the Caribbean may facilitate some output expansions in Cuba, the Dominican Republic and Panama. In South America, larger 2009 crops were already harvested in Argentina, Bolivia, Brazil, Colombia and Peru, more than offsetting reductions in Guyana, Uruguay and Venezuela. In the other regions, production is set to rise in the European Union (EU), the Russian Federation and the United States. Despite a recovery, 2009 paddy production in Australia continues to be constrained by lack of water for irrigation.
Planting of the 2010 paddy crops is already well advanced in southern hemisphere countries. The season is opening negatively in South America, where drought or excessive rainfall have delayed sowing of the main crops. Likewise, it is feared that drought associated to El Niño may depress crops in Indonesia. Despite expectation of an increase, output in Australia would remain below the highs of the early-2000s. The production outlook is uncertain in southern African countries, where the January and March cyclone period is just starting.
FAO’s estimate of global rice trade in calendar 2009 has been downgraded, now pointing to a volume of 30.0 million tonnes, marginally below the level traded in 2008. Relatively abundant supplies from 2008 season were behind a cut of imports by Asian countries, especially Bangladesh, Indonesia, Malaysia and the Philippines, while shipments to countries in Africa and Latin America and the Caribbean rose. The drop in world rice exports was mainly on account of China, Pakistan, Thailand and the United States, while government curbs in India and Egypt also restrained the availability of rice for trade. Despite the world stagnation, exports by Viet Nam surged to a new record in 2009. Argentina, Brazil, Cambodia and Myanmar were also able to step-up shipments.
World trade in rice in 2010 is forecast to recover slightly to 30.5 million tonnes. The expansion would be supported by a strong import demand from Asian countries, especially the Philippines. Purchases by Brazil and the United States could also rise, while deliveries to African countries might diminish. The 2010 trade recovery would be sustained by increased exports by Thailand which look set to rebound, but also by China, Myanmar and Viet Nam, compensating for reduced shipments from Cambodia, the United States and Uruguay.
Global rice utilization in 2010 is projected to expand by 8 million tonnes to 454 million tonnes, with the bulk of this volume, some 389 million tonnes, anticipated to be consumed as food, 1.5 percent more than in 2009. As a result, per caput food consumption is expected remain largely unchanged at 57.3 kilograms, being sustained by government programmes that have helped dampen the effects of stubbornly high prices across regions.
Following improved 2009 production estimates, the FAO forecast of world stocks at the close of the marketing years ending in 2010 has been raised by 6 million tonnes to 123 million tonnes, which represents a 1 percent drop from opening levels. Much of the contraction is expected to stem in the five major exporting countries, which, as a group, are forecast to close the year with a 24 percent draw down to 24.5 million tonnes. Conversely, rice importing countries, such as Indonesia and the Republic of Korea, are expected to build their inventories. Relative to world consumption, global rice reserves appear ample and sufficient to cover roughly 27 percent of utilization in 2010.
Notwithstanding the arrival into the market of freshly harvested supplies, international rice prices strengthened in the last quarter of 2009, reversing a downward trend that had been sustained since May. This was reflected in the FAO All Rice Price Index rising by 15 points to 247 points from September to December. The rebound of world quotations mainly concerned the Indica rice market, with gains particularly evident in lower quality varieties, which gained 49 points over the period. Prices for higher-quality Indica rice also strengthened, while quotations for both Aromatic and Japonica varieties lost ground. On average, rice prices in 2009 fell 42 points below their value in 2008, remaining, however, 92 points above the 2007 average. Prospects for prices in the coming months are uncertain, but with the major exporting countries holding less supply or imposing export restrictions, prices are unlikely to subside before newly harvested crops reach the market in March/April.
