Regional Office for Asia and the Pacific

FAO heightens global 2013 rice production forecast

Global paddy production for 2014 downgraded due to slow seasonal rains and looming threat of El Niño

FAO heightens global 2013 rice production forecast

Bangkok, Thailand, 17 Jul 2014 -- Asia and Western Africa have produced more rice in the 2013 season currently drawing to a close than expected last April, heightening the global paddy production forecast, the UN’s Food and Agriculture Organization (FAO) reported today.

FAO now forecasts 2013 global paddy production at 747.0 million tonnes, or 498.0 million tonnes on a milled basis. The resulting 1.5 percent year-to-year increase still falls short of the long-run pace of 2.0 percent registered since 2000, according to the report.

“All of the expansion we are seeing in 2013 global production is understood to be the result of an enlarged paddy area, as yields declined slightly,” said Hiroyuki Konuma, FAO Assistant Director-General and Regional Representative for Asia and the Pacific.

2014 rice forecast downgraded

In contrast, FAO slightly downgraded its forecast for global paddy production in 2014 partly due to the slow establishment of seasonal rains in Asia, warning however that the outlook will depend on the timing and intensity of a looming El Niño. The report now forecasts 2014 production of 750.9 million tonnes, or 500.7 tonnes on a milled basis, 120 000 tonnes less than foreseen in April and just 0.5 percent above the revised 2013 estimate.

Asia is anticipated to garner about 679 million tonnes in 2014, a volume only 0.2 percent, or 1.1 million tonnes, higher than in 2013. However, much will depend on the progress of the seasonal rains, especially over the critical month of July.

“Such a meagre growth reflects expectations of a poor season in India, but also in Indonesia, Nepal, Sri Lanka and Thailand, all of which might face year-on-year contractions,” according to the report. “By contrast, Bangladesh, China (Mainland), Myanmar, Pakistan, the Philippines and Viet Nam are anticipated to see production expand, often underpinned by additional government support.”

FAO’s 2014 production outlook for Thailand points to a 2 percent year-on-year fall to 37.5 million tonnes, or 24.8 million tonnes on a milled basis, due both to delayed onset of rains and expectations that farmers will plant less in anticipation to steep falls in producer prices from those offered under the former administration’s paddy pledging program.

Hiroyuki Konuma added with FAO’s estimate that Thailand would export about 9 million tonnes of rice in 2014; 35% higher than that of 6.6 million tonnes in 2013,  but would still hold 18.5 million tonnes of stock at the end of this season.  India would likely remain  as number one rice exporter of 10 million tons, followed by Thailand ( 9 million tons) and Vietnam (7 million tons) in 2014.

Since the April issue of the RMM, FAO has raised its forecast of global carryover stocks in 2014 by almost 1.0 million tonnes, now pointing to a high in global inventories of 181.4 million tonnes. Under current expectations of subdued 2014 production growth, world rice inventories in 2015 could undergo their first contraction in a decade. Much of the decline will be driven by draw downs in the major exporting countries, which, however, will continue to hold abundant supplies.

Global rice utilization in 2014/15 is set to expand by 2.2 percent to a new high of 502.3 million tonnes on a milled basis, sustained mainly by demand for food but also for other uses such as seeds, post-harvest losses and non-food industrial usage. Based on the latest projections of population, the global per person food rice intake will remain stable at around 57.6 kilos.

New record forecast for global trade

FAO has raised its forecast of global trade in rice in calendar 2014 by about 100 000 tonnes since April and is now projecting 39.4 million tonnes in 2014, an outstanding 6 percent increase from the depressed 2013 level and a new record. The 2.3 million tonnes expansion would be underpinned by strong import demand, mainly in Asia, where key markets, such as Bangladesh, Indonesia and the Philippines are stepping up purchases abroad in an attempt to rebuild inventories and/or quell inflationary pressure.

On the export side, Thailand is projected to capture much of world import demand growth in 2014, reflecting a return of competitiveness following the suspension of the paddy pledging program and large offloads from public warehouses, according to the RMM. Larger shipments from Thailand would partly displace deliveries by India, which, nonetheless, are envisaged to remain sizeable.

International rice prices have been stable in recent months but the report explains that this apparent stability masks diverging trends across the rice segments and sources. While aromatic prices held still over the past three months, Japonica prices dipped. Meanwhile Indica quotations have partially recovered since June as a result of brisk import demand and a tightening of supplies associated with a temporary suspension of stock sales in Thailand. As a result the benchmark Thai white 100% B export prices recovered somewhat starting in June, according to the report, although they are still quoted far below their corresponding level in 2013.