Assuming a return to more normal weather patterns, Asian rice production in 2013 could rise by 2.2 percent, or 15 million tonnes, to 677.5 million tonnes, or 451.7 million tonnes, milled basis, according to the FAO Rice Market Monitor (RMM), published today on the Organization’s website. Globally FAO foresees production in the forthcoming 2013 season to rise by 2.1 percent to 746.7 million tonnes, 497.7 million tonnes, milled, some 16  million tonnes more than in 2012.

RMM says: ”To a large extent, such an expansion relies on expectations of a recovery in India, with further large absolute gains anticipated in China (Mainland) and Indonesia. Assuming growing conditions normalise, output in 2013 is expected to recover in the Republic of Korea, Myanmar, Pakistan and Sri Lanka, with increases also anticipated in Bangladesh, Cambodia, Philippines and Thailand. By contrast, early prospects in Japan and Viet Nam point to a retreat following expectations of less ideal weather conditions compared to 2012.”  

Looking at domestic price developments in Asia, the report says “retail/wholesale prices have strengthened in both Bangladesh and India over the first quarter of the year compared to their values three months before, while in the Lao PDR, Myanmar and Viet Nam they have taken a downward trend.”However, it adds that “relative to a year ago, local prices are generally higher in many  Asian countries, in particular, India and Myanmar.”

As for international prices, by April 2013, the benchmark Thai white rice 100% B was quoted at US$586 per tonne, 4 percent less than in January 2013. According to RMM, the large stocks accumulated by the Thai government through the paddy pledging programme weighed on market sentiment.

RMM says, “The main-crop round of the scheme finished with close to 13 million tonnes of paddy absorbed and an additional 7 million tonnes are expected to be mortgaged under the April-launched offseason round. Indications by Thai officials that large government stocks sales were forthcoming and needed so as to fund the continuation of the program have not materialized, as substantial stock releases for export have yet to take place.”

Based on the latest estimates, the world’s five major exporters, India, Pakistan, Thailand, the United States and Viet Nam, are set to conclude their individual marketing years with a combined 42.9 million tonnes of rice on stock, up 4 percent year-on-year. This is nearly 3 million tonnes less than previously foreseen.

The downgraded outlook for stocks follows prospects of a smaller crop in Thailand, which has seen secondary crop output cut short by prevailing dryness and insufficient water for irrigation. In spite of the reduction, Thailand is still forecast to end its 2012/13 marketing year with a record reserve of 16.3 million tonnes, most of which is held in government storehouses as a result of the paddy pledging programme.

RMM warns that “much of the market and competitors’ attention will focus in the coming months on Thailand. Indeed, the Thai government’s reticence to release large volumes of supplies from stocks at prices below purchase levels may be outweighed by the need to secure enough storage space and finance for the continuation of the programme beyond the 2012/2013 season.”

The FAO report also says that developments in India regarding the expansion of the public distribution systems will also need to be watched closely, as will efforts by other major players to keep prices at profitable levels for producers. “As always, currency movements and developments in other cereal markets will also influence international prices.”

Compared to figures released in January 2013, RMM says rice carry-overs are anticipated to be lower in India at 22 million tonnes. “The 8 percent reduction from 2012 is consistent with prospects of a still upbeat pace of exports by the country, but also with  the increased allocations for subsidised public distribution approved this year.”