Regional Office for Asia and the Pacific

Rice production in 2005 estimated to surpass 621 million tonnes; Highest level on record

Thailand, 28 Jun 2005 -- Driven by higher prices in 2004 and expanding cultivation, global paddy rice production in 2005 is estimated to surpass 621 million tonnes, the highest level on record, FAO said today.

The June 2005 issue of FAO’s Rice Market Monitor is forecasting that global paddy production could swell to 621 million tonnes as rice producing countries are reacting to the rise in prices witnessed in 2004 by expanding cultivation.

If confirmed at that level, the 2005 rice harvest will be the highest on record (1999), and 16 million tonnes more than in 2004.

Much of the expansion is concentrated in Asia with mainland China boosting production by 6 million tonnes compared to last year, and with large increases also coming from Bangladesh, India, Myanmar, Pakistan, Sri Lanka and Thailand.

By contrast, the outlook is less buoyant for Indonesia, Japan and Viet Nam which might experience a contraction in rice production. Australia again experienced extremely dry conditions, resulting in 36 percent shortfall from last year.

In the rest of the world, output might decline slightly in the United States while production prospects in Africa point to a 6 percent increase for the region.

Rice trade
Rice trade in 2005 is forecast at 25.5 million tonnes which would be 2.8 percent less than in 2004. This would mark the third consecutive decline from the record rice volume exchanged in 2002.

Much smaller exports are anticipated from Thailand, the largest rice exporter in the world, and also China due to policies which are sustaining domestic prices, often to levels exceeding those of competing rice exporting countries. Viet Nam will remain the second largest rice exporter in 2005.

However, the decline in trade is also reflecting a retrenchment from the market of some of the traditional importing countries which succeeded in boosting production in the past few years. These include Brazil, Indonesia, Iran and Nigeria.

Rice prices
As growing supplies from the secondary rice crops are becoming available, international rice prices have experienced some downward pressure since March with the FAO All Rice Price Index falling from 107 in February to 106 in March and April.

The slide continued in May and June, and the tendency of international rice quotations in the coming months is still subject to much uncertainty.

The recent agreement between Thailand and Viet Nam to adopt a common strategy to prevent an undercutting of each other’s export prices might be taken as a sign to the market that stocks would not be released unless international prices strengthen.

Rice inventories
While a number of important rice producing countries in South East Asia are preparing to plant or have started planting their 2005 main crop, several of them have witnessed the end of a drought that had been lingering since the last quarter of 2004.

The countries most affected by the dry spell were Cambodia, China, Laos, Thailand and Viet Nam where insufficient precipitation caused a severe depletion of the Mekong River flow, one of the world’s most important hubs to rice cultivation.

Reflecting changes in the 2004 production estimates (604.9 million tonnes), global rice inventories at the close of the crops season ending in 2005 are now assessed at 97.1 million tonnes, down from an opening level of 105 million tonnes.

If confirmed, this would be the lowest level of world rice stocks in the decade, resulting in a stock-to-utilization ratio of 23 percent.

RAP 05/18

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