04 Jul 2003 -- Bangkok – International prices of rice have continued to strengthen since the beginning of the year and climbed to a two-year high, as rice stocks are drawn heavily and are at the lowest level for more than two decades.
A combination of short export availabilities in several major exporting countries and strong international demand has fuelled the rise in international rice prices during 2003. For example, exports from the United States, Pakistan and Viet Nam were up sharply because of the launching of food aid for Iraq and the surging demand for commercial imports.
Among the different types of rice traded, medium-grain rice such as the US 2/4% experienced the largest price increase (plus US$75). The price for Thai 100% B rose US$4 as were modest increases for Vietnam 5% and Pakistan Irri 10%.
The upward price momentum was not as strong for lower quality rice. With supply in abundance, quotations from Thailand for 100% broken rice fell, but the decline was compensated for by a strengthening of prices of 25% broken rice in Viet Nam, Pakistan and India.
Flagrant rice prices rose to levels not seen since 1999, reflecting a tightening of supplies together with the government procurement policy in Thailand. By contrast, basmati prices remained subdued, falling by 9 percent in Pakistan and rising only slightly in India.
The June 2003 issue of FAO’s Rice Market Monitor estimates that world rice inventories at the end of the marketing seasons in 2003 are down to 122 million tonnes, some 28 million tonnes below their opening level. This is the lowest level of world rice stocks for more than two decades. The overall contraction is mostly due to China and India, which are now set to experience reductions of the order of 15 and 12 million tonnes respectively.
While there is still considerable uncertainty regarding the level of rice stocks at the close of this year’s season, a further drawdown of 19 million tonnes in rice world inventories to 103 million tonnes is currently foreseen. China would again account for much of the contraction given the expected drop in production this season. Similarly, an exceptionally low harvest in Australia should result in a sharp decline in end-of-season inventories in that country, while Indonesia’s efforts to curb the level of imports may also result in lower closing rice inventories.
Estimates for trade in 2003, at 27.1 million tones, point to a one million tonne contraction from the historical record achieved last year, reflecting smaller deliveries to some of the major rice markets such as the Philippines, Indonesia, Republic of Iran and Iraq. The volume flowing to African countries is also falling somewhat, mainly in Côte d’Ivoire and Nigeria. By contrast, Latin America and Caribbean countries such as Brasil, Mexico and Cuba are anticipated to raise the volume of their rice imports.
As to exports, major exporters Thailand, Myanmar, Pakistan, the United States and Viet Nam are likely to improve their performance. Food aid could also boost rice shipments by Japan, while expectations point to a sharp decline in exports from India and Australia.
Based on preliminary harvest results in the southern hemisphere and the planting intentions in the northern hemisphere, overall global rice output in 2003 is tentatively forecast at 396 million tonnes (592 million tonnes in paddy terms), two percent higher than last year’s depressed level. However, this figure is still highly tentative since the final outcome will depend largely on the timing, extend and distribution of the Asian monsoon rainfall, which has an important bearing on the global outcome.
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