Regional Office for Asia and the Pacific

Rice production to outpace demand, but some uncertainties remain - FAO’s Rice Market Monitor January 2011 issue published

Rice production to outpace demand, but some uncertainties remain - FAO’s Rice Market Monitor January 2011 issue published

Bangkok, Thailand, 03 Feb 2011 -- FAO has raised its estimates for global rice production by 3 million tonnes, saying that global paddy production is expected to outpace demand. This will facilitate the building-up of stocks to their highest level since 2002. The agency cautioned, however, that some uncertainty remains, especially with respect to the crops that will be harvested in the next few months.

The January 2011 FAO Rice Market Monitor expects the 2010 world paddy production to reach 700.7 million tonnes (467.3 million tonnes, milled basis), three million tonnes more than estimated in November 2010. The new output level would be 3 percent larger than that in the disappointing 2009 season and would set a new record.

However, higher production levels very much depend on a positive outcome of the secondary rice crops in the northern hemisphere countries, which will be harvested between February and June this year, bringing the 2010 rice season to a close. Indeed, in a number of producing countries, the first harvests of the season – mostly gathered in the fourth quarter of last year – were disappointing, because of atypical and extreme climatic conditions, often associated with the influence, since June 2010,  of the La Niña weather anomaly.

Asia is expected to account for the bulk of the production increase, despite several setbacks experienced over the season. Major gains are expected in Bangladesh, China, India, Indonesia, the Philippines, Sri Lanka and Viet Nam, while the Republic of Korea, Thailand and, in particular, Pakistan could face production declines. Greater water allocations were behind a two-fold increase in rice harvested in Australia.

Larger rice harvests are also forecast in Africa, North America, Europe and Oceania, more than compensating for shortfalls in Latin America and the Caribbean.

Based on current expectations, global rice production is anticipated to surpass consumption by more than 6 million tonnes, resulting in a build-up of world rice stocks to 137.2 million tonnes.

The refurbishing of rice inventories is expected to lift the global stock-to-use ratio from 29.1 percent in 2010 to 29.7 percent in 2011.

World rice trade
2010 world trade in rice is now forecast at 31.5 million tones, 6 percent more than in 2009.

This expansion was primarily driven by greater imports by Asian countries, either to compensate for production shortfalls, curb domestic inflationary pressure or reconstitute stocks. As for exports, much of the increase can be attributed to Viet Nam, but also to Pakistan, Thailand and the United States. However, Myanmar severely cut deliveries.

In calendar 2011, world rice trade is forecast to reach 31.4 million tonnes, only slightly below the estimate for 2010. Improved supplies will help Asian countries to reduce their purchases of rice, while Europe and Africa may buy more. Increased exports from Thailand will help compensate for a possible retrenchment of deliveries from Pakistan and Viet Nam.

Rice prices
In contrast with the sharp price increases witnessed in the wheat and maize markets, world rice prices in 2010 were down by 9 percent compared to one year earlier, influenced by the relatively low quotations that prevailed in the second and third quarters of the year.

As for the coming months, relatively abundant supplies are expected to moderate the pressure stemming from other grain markets. Much will depend, however, on how the rice crops that are still in the field will fare.

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The full text of the January 2011 issue of FAO’s Rice Market Monitor is available on the Internet at the following address: http://www.fao.org/economic/est/publications/rice-publications/rice-market-monitor-rmm/en/

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