Rice prices fall and trade slows after bumper harvests 


After two years of record trading, major rice exporting countries are facing falling prices and declining demand for the world's number one staple cereal. World rice trade in 1997 is forecast to fall to 18.5 million tonnes, 2.4 million tonnes below record levels of 1995 and nearly 1 million tonnes down from last year, according to the latest Rice Market Update, FAO's monthly report on the latest developments in the world market for rice.

 

All major traditional exporting countries are expected to be affected. India, whose spectacular leap to become the world's second largest exporter in 1995 had pushed the United States into third place in the ranking of world rice exporters, is forecast to export only 2.5 million tonnes of milled rice in 1997, as compared to 4.2 million tonnes in 1995. Shipments by Thailand and Viet Nam during the first four months of the year are already down sharply from 1995 and 1996 levels. Viet Nam's exports during the period declined 25 percent from last year. Lack of substantial buyers and good second and third paddy harvests in many exporting countries have combined to push prices down.

Despite the falling prices, some countries whose people depend on rice for up to two-thirds of their daily diet cannot afford to import the rice they need. This is the case in the Democratic People's Republic of Korea, where the rice shortage is estimated to be very large following successive years of disastrous harvests because of flooding.

By contrast, shipments of rice are now beginning to arrive in Iraq under the "food-for-oil" agreement. Unconfirmed reports indicate that over 25 000 tonnes had been shipped from Thailand under the agreement by the end of March. Iraq's rice imports for the year are estimated at about 0.6 million tonnes.

No firm forecasts can be made for the year's rice import demands until the paddy crop season gets under way with the start of the monsoon rains, normally in June. Only after this, do country needs become clear. So far, a handful of countries have announced intentions to buy. The Republic of Korea is expected to tender for 77 000 tonnes in June and Sri Lanka needs 450 000 tonnes to meet its shortage. Although Japan is scheduled to import 531 000 tonnes in 1997/98, it has not yet started to buy as stock levels are very high.

 

12 May 1997

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