Regional Office for Asia and the Pacific

Asia’s main rice crop forecast to increase 1.5 percent on 2012

The price of rice continues to vary considerably across Asia

Asia’s main rice crop forecast to increase 1.5 percent on 2012

Bangkok, Thailand, 01 Aug 2013 -- Early and abundant monsoon rains have boosted prospects for main crops in Asia, which may produce 677.9, or 452.0 million tonnes of rice, milled basis, up 1.5 percent from a revised 2012 outcome,” says the FAO Rice Market (RMM) Monitor issued today on the Organizations website. If weather conditions hold, India together with mainland China “are forecast to lead the region’s growth, but virtually all countries in the region are heading towards larger crops, with particularly sizable gains foreseen in Bangladesh, Myanmar, Pakistan, the Philippines and Thailand.”

Globally FAO forecasts 2013 global paddy production at 746.4 million tonnes, or 497.6 million tonnes on a milled basis, down roughly 300 000 tonnes from the amount anticipated in April. The downward revision was caused mainly by Indonesia, but output figures for Cambodia, mainland China, the European Union, Madagascar and the United States were also slashed, according to the report.

RMM says that international rice prices have been stable in recent months, but warns that the “apparent stability masks diverging price trends across the various rice segments and sources.” Indica rice quotations fell steadily, pressured by weak demand. This contrasted with a firming of Japonica prices, which were sustained by strong demand from Far East countries and the retreat of Egypt from exports. Meanwhile, the Aromatic Index, supported by rising Basmati quotations, tended to stabilise around the high values reached in March 2013.

“The tendency for prices to fall has been particularly pronounced in Thailand, where uncertainties over the paddy pledging programme compounded the downward pressure exerted by weak external demand and a depreciating Baht,” RMM says.

“Prospects for Thai rice in the 2013 season are positive, according to RMM. “Good weather has permitted planting of main paddy crops to proceed smoothly, with favourable rains also expected to replenish major reservoirs for the irrigated offseason crop.” Assuming climatic conditions remain favourable the rest of the season and considering the strong public support extended to the sector, Thailand is forecast to harvest 37.5 million tonnes, or 24.8 million tonnes on a milled basis, or 2 percent more than 2012.

While little question remains concerning the Thai Government’s intention to extend its controversial paddy pledging scheme for a third consecutive season, RMM says, “the terms of its implementation, and especially the prices to be offered to producers, have yet to be defined.”

RMM says there is “mounting pressure over the financial weight of the programme after the scheme was found to have accumulated losses worth of Baht 137 billion (USD 4.4 billion) in the 2011/12 season alone,” which “prompted the authorities in June to abruptly cut mortgaging prices by 20 percent for what was left of the 2012/13 secondary-crop run of the programme. Yet, faced with strong opposition from farmers, the Government reverted its decision less than two weeks later, re-establishing prices at Baht 13 800-15 000 (US$ 444-482) per tonne.”

With the country’s competitiveness on international markets severely eroded by the high domestic prices and the Government having to shoulder the costs of maintaining enormous public stocks, RMM says it would appear increasingly likely that pledging prices will be decreased. “Decisions to these effects are, however, likely to be accompanied by the institution of alternative support measures, including efforts to assist producers cut production costs and raise yields, or move into cultivation of more profitable crops as already encouraged in June.”

Based on the latest forecasts, RMM says global trade in rice in calendar 2013 is set to decline by 2.5 percent to 37.5 million tonnes. From a regional perspective, a 1 percent reduction in deliveries to Asia to 17.9 million tonnes would explain much of this retrenchment. “Compared to figures released in April, however, Asian countries’ imports have been raised by 400 000 tonnes, to account for expectations of larger consignments to China (Mainland). Based on official statistics, cumulative shipments to the country amounted to 1.3 million tonnes in the first six months of 2013, surpassing their year-earlier level by 12 percent.”

FAO’s forecast of world rice stocks at the close of marketing seasons ending in 2014 has been raised by 3.3 million tonnes. World rice inventories are now expected to increase by 4 percent, or 7.2 million tonnes, to 181.2 million tonnes, which would mark the ninth consecutive year of world stock accumulation.

Read the full report here:

  • John O. Riddle
    Interim FAO Information Officer
    FAO Regional Office for Asia and the Pacific
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