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FAO Rice Market Monitor (RMM)

The FAO Rice Market Monitor (RMM) provides an analysis of the most recent developments in the global rice market, including a short-term outlook. Presently, the full document is available only in English but highlights are available in Spanish and French. Monthly updates of selected rice export prices are available on the FAO Rice Price Update. To subscribe to the FAO Rice Market Monitor and the FAO Rice Price Update, please send an e-mail to the RICE MARKET NETWORK with "subscribe" in the subject line.

Beware that the French and Spanish translations of the Round-Up of the newly released FAO Rice Market Monitor will only become available in a few day's time.


FAO Rice Market Monitor, July 2017, Volume XX - Issue No. 2

Release date: 21 July 2017

ROUND-UP

By now, countries located along and south of the Equator have already collected their 2017 main crops, with a few countries now engaged in offseason cropping activities. The 2017 season is less advanced in the northern hemisphere, where producers have just put their main-crops in the ground or are still busy doing so. At 758.8 million tonnes (503.6 million tonnes, milled basis), FAO’s latest forecast of global paddy production in 2017 is little varied from April expectations, despite a number of significant revisions at a country level. In particular, adverse weather conditions called for downward adjustments to production prospects for Bangladesh, China (Mainland), Sri Lanka, the United States and Viet Nam, although most of these changes were offset by improvements for Brazil, Cambodia, Egypt, India, and Myanmar.

At 758.8 million tonnes (503.6 million tonnes, milled basis), world paddy production in 2017 would stand 0.8 percent, or 5.8 million tonnes, above a revised estimate for 2016. The comparatively modest year-on-year increase mirrors constraints posed by tight margins and heightened competition with other crops, which could entail a slow-down in the rate of area expansions. Still, the season is unfolding under generally favourable weather conditions. This is namely the case in Asia, where, with a few notable exceptions, conducive rains have aided cropping activities. Provided weather conditions hold, the continent is expected to gather 0.7 percent more than the record of 2016, or 686.1 million tonnes. Much of the region’s production growth is envisaged to take place in India and Indonesia, owing to continued government support, and in Thailand thanks to prospects of improved margins. In addition, Cambodia, China (Mainland), the Islamic Republic of Iran, Iraq, the Lao People's Democratic Republic, Malaysia, Myanmar, Nepal, Pakistan, the Philippines and Turkey are all foreseen to gather more in 2017. Weather vagaries could instead keep production in both Bangladesh and Viet Nam close to 2016 reduced levels, while output is expected to fall in Afghanistan, the Republic of Korea and, especially, Sri Lanka.

In Africa, paddy production in 2017 is now predicted to reach 30.9 million tonnes, up slightly from the 2016 excellent harvest. Continued production expansions in West Africa are likely to sustain the feat, with positive results in Ghana, Guinea, Mali, Nigeria and Senegal often facilitated by state support under programs pursuing self-sufficiency in rice. Nonetheless, more buoyant yield prospects have also boosted the outlook for Egypt, where plantings proved more resilient than last envisaged. Gains in these countries would more than compensate for shortfalls in eastern and southern Africa. This would be namely the case of the United Republic of Tanzania and Madagascar, where crops were exposed to unseasonable dryness, with additional losses inflicted by cyclone Enawo in Madagascar.

In Latin America and the Caribbean, favourable growing conditions are expected to foster a 6 percent production recovery in 2017 to 28.1 million tonnes. Brazil is set to account for much of this upturn, although Cuba, the Dominican Republic, Ecuador, Guyana, Nicaragua and Uruguay are all heading towards larger crops. Instead, inclement weather is behind expected contractions in Chile and Peru, with tight margins also driving reductions in Argentina, Bolivia and Colombia.

In the other regions, the outlook is negative for the United States and Europe, where area cuts induced by subdued prices have been recently compounded by poor weather. Instead, output is assessed to have reached a four-year high in Australia, as ample and more affordable water availabilities sustained a rebound in plantings.

International rice trade in calendar 2017 is now forecast to exceed the 2016 depressed level by 7 percent to 44.2 million tonnes, which is 930 000 tonnes more than predicted in April. The forecast growth is expected to be demand-driven and concentrate in Asia, where important buyers have turned to imports to rebuild inventories and/or quell upward pressure on domestic prices. Within the region, sizeable import increases are envisaged to concern Bangladesh, the Philippines and Sri Lanka, although China (Mainland), the Islamic Republic of Iran, Iraq, Malaysia and Saudi Arabia are also set to purchase more from abroad. These gains would more than compensate for cuts elsewhere, with the largest reduction set to concern Indonesia. Albeit more moderately, African countries are also seen raising imports, led by gains in Nigeria, Madagascar, but also Liberia, Senegal and Sierra Leone. Instead, ample local availabilities may cause demand to wane in Latin America and the Caribbean, Europe and the United States. On the export side, India, Thailand and Viet Nam remain forecast to capture much of the expected trade growth this year, although affordable prices are similarly envisaged to translate into strong export performances by China (Mainland) and Myanmar. Australia, Paraguay, the United States and Uruguay are also envisaged to count on sufficient availabilities to lift exports in 2017. By contrast, in the aftermath of output shortfalls or heightened competition, Argentina, Brazil, Pakistan and the Russian Federation are seen shipping less, while continued export restrictions lower deliveries by Egypt.

Despite a 700 000 tonne downward adjustment since April, global rice utilization is forecast to grow by 1.1 percent in 2017/18 to 505.8 million tonnes (milled basis). All of this increase would be attributable to a 1.4 percent expansion in food use to 408.4 million tonnes. This level would be sufficient to keep global per capita consumption largely steady at around 54.3 kilos per person. Meanwhile, quantities destined to feed and other uses (including seeds, post-harvest losses and industrial uses) are anticipated to fall fractionally to 17.9 and 79.5 million tonnes, respectively. Cuts to industrial and feed uses in China (Mainland), but also in Bangladesh and the Republic of Korea, would be behind these reductions. Still, much of these losses look set to be compensated by increases in Thailand, where public stock releases of rice no longer fit for human consumption could boost industrial and feed uses sharply.

FAO’s forecast of world rice inventories at the close of 2017/18 marketing seasons now points to global reserves staging a modest 0.5 percent annual recovery to 170.8 million tonnes. Rice importing countries are predicted to account for all of the rebuilding, in particular China (Mainland), but also Bangladesh, Indonesia and the Philippines. Elsewhere, good crop harvests are also expected to translate into sizeable accumulations in Brazil and Myanmar, but these gains would be partly offset by reductions in Thailand and the United States. Indeed, drawdowns in the two countries look set to lower aggregate reserves by the five major rice exporters (India, Pakistan, Thailand, the United States and Viet Nam) for the fourth successive season. This would result in their 2017/18 stock-to-disappearance ratio falling to a ten-year low of 16.7 percent.

International rice prices have made further inroads since April, notwithstanding the arrival of fresh supplies from secondary harvest in the northern hemisphere and of main crops south of the Equator. The gains coincided with an intensification of import demand, which was accentuated by production disruptions in the United States and Viet Nam and by an end in sight to the supply overhang in Thailand. This was reflected by the FAO All Rice Price Index (2002-2004=100), which averaged 210 points in mid-July, up 6 percent from April and its highest level since August 2015. Compared to April, the most pronounced gains have concerned Indica varieties, whose prices have risen by 8-10 percent following a stream of orders from countries such as Bangladesh, Iran, Iraq and, more recently, the Philippines. The Japonica Index also began a 6 percent recovery in June, amid prospects of a smaller US crop. Conversely, subsiding demand for Basmati rice caused the Aromatic Index to ease by 1 percent to 206 points.

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