FAO Rice Market Monitor, November 2013, Volume XVI - Issue No. 4
Since the release of the July issue of the RMM, prospects for the well advanced 2013 paddy season have been marred by a series of setbacks, resulting in more subdued expectations for global paddy production in 2013. As a result, the July forecast has been revised down by about 5 million tonnes to 741.4 million tonnes (494.2 million tonnes, milled basis), implying a growth of only 1.1 percent, or 7.8 million tonnes, from the 2012 production estimate. The deterioration of prospects primarily concerned China (Mainland), Pakistan and the Philippines, which were hit, in recent months, by erratic climatic events, including storms and typhoons. Adverse growing conditions also impaired prospects in Madagascar, Mali and Senegal, while revisions to historical figures called for a sizeable scaling down of 2013 estimates in Egypt and Myanmar. Part of these reductions was compensated by more buoyant production forecasts in a number of countries, especially Indonesia, Thailand and the United States.
Although accounting for much of the worsening in the global outlook, Asia is still expected to sustain growth in world rice production in 2013. According to the latest forecasts, the region is to harvest 672.7 million tonnes (448.6 million tonnes, milled), 1.2 percent more than in 2012. Foremost among countries responsible for the increase are India, Indonesia, Thailand, Myanmar and Bangladesh. By contrast, drought in China's central and eastern provinces exacted a heavy toll on the intermediate and late rice crops, which may bring about the first production decline in the country since 2003. Japan, Malaysia and the Philippines could also face a contraction. In the Philippines, the passage of super-typhoon Haiyan had only a limited impact on the main crop, as much of the rice had been harvested. However, the implications for the secondary crop, now at the planting stage might be more severe, as agricultural activities in the affected regions will be hindered by the losses of lives, displacement of the local populations and the destruction of agricultural machinery and infrastructure. The outlook for crops in Africa also has deteriorated since July, with paddy production in the region poised to remain unchanged at the 2012 level of 26.8 million tonnes (17.5 million tonnes, milled). This apparent stability masks different trends across the region, as output gains in Northern Africa (Egypt), Western Africa (Guinea, Mali and Nigeria), Eastern Africa (Tanzania, Uganda) and Central Africa (Cameroon) are expected to compensate for an 18 percent drop in Southern Africa, caused by Madagascar's sharp losses. In Latin America and the Caribbean, rice production in 2013 was slightly raised to 28.0 million tonnes (18.7 million tonnes, milled), 1.9 percent above the depressed 2012 level, insufficient to sustain a full recovery to the high 2011 level. In Central America and the Caribbean, most producers are anticipated to harvest larger crops, especially the Dominican Republic and Mexico, while in South America, the outlook is mixed, with sizeable increases expected in Brazil, Guyana, Paraguay and Venezuela, and declines in Bolivia and Chile. In North America, despite an improved outlook, the United States is anticipated to face a 5 percent drop in production this year. In Europe, prospects changed little for the EU and the Russian Federation, with the first heading towards a sharply reduced harvest and the second towards a new record crop. In Oceania, Australia already reaped its 2013 crop early this year, achieving the best results in the past ten years.
Countries located along and south of the equators have started sowing their 2014 main crops, with some already providing indications on possible outcomes for the forthcoming season. For instance, abundant water for irrigation is anticipated to foster an increase of sowings in Argentina, Chile and Uruguay, despite lingering concerns over high costs and falling returns. Although planting surveys point to little change in area coverage in Brazil, officials forecast production to rise by 2-5 percent on higher yields. In Asia, Viet Nam already announced it will encourage a shift of plantings away from rice, while Indonesia has set an official production target calling for a 6 percent production increase. By contrast, in Australia, drought conditions and expectations of lower yields have led officials to foreshadow a 22 percent drop of output.
FAO's forecast of world trade in rice in calendar 2013 has not changed since July, remaining at 37.5 million tonnes (milled basis), implying a 2 percent contraction from the 2012 record. The retrenchment is expected to be demand-led, and mostly imputable to import cuts in the Far East (Indonesia, the Philippines) and in Western Africa (Nigeria, Senegal), a reflection of good crops, but also of the restrictive policies instituted as part of self-sufficiency programmes. Poor production results, combined with strong domestic demand, are, instead, foreseen to lift purchases in Europe (EU), Latin America and the Caribbean (Brazil, Colombia) and North America (United States). Among exporters, the faltering import demand is foreseen to curb shipments from Viet Nam the most, although supply constraints and high prices are also expected to depress sales by Argentina, Brazil, and Uruguay. Given a poor delivery record so far, Thailand appears unlikely to boost its exports beyond the relatively low level of last year. Expectations have, instead, improved for India, which may replicate the 2012 record performance, with Australia, Cambodia, China (Mainland), Egypt, Pakistan, Paraguay and the United States also forecast to export more.
Global trade in rice in 2014 is currently forecast at 38.3 million tonnes, 2 percent above the 2013 current trade estimate and only fractionally short of the 2012 record. On the export side, much of the trade growth is forecast to be captured by Thailand, where government releases of supplies from stocks have resulted in prices falling in recent months, helping the country regain its competitive edge. Ample supplies may also enable Brazil, China (Mainland), Egypt, Guyana and Paraguay to step-up deliveries. However, a return in force of Thailand as an exporter is seen to affect negatively sales from most of the other suppliers, in particular India, which may, nonetheless, retain its dominant position in the global rice market. Shipments by Argentina, Pakistan, Uruguay and the United States are also anticipated to fall.
FAO has lowered its forecast for global rice utilisation in 2013/14 to 489.4 million tonnes (milled basis), 2.8 percent more than in the previous year. The increase is sustained by a 8 million tonne rise in global food intake to 410.6 million tonnes. As a result, per caput rice consumption is forecast to average 57.0 kilos in 2013/14, up from 56.5 kilos in 2012/13. The rise would be in spite of generally high retail prices compared to last year, often fostered by a widening of subsidized distribution schemes, especially in Asia, where Bangladesh, Indonesia and, especially, India have recently expanded the scope of such programmes.
World rice stocks carried over in 2014 are now projected to surpass their opening levels by 4.6 million tonnes, sufficient to lift the global stocks-to-use ratio from 35.6 percent in 2012/13 to 35.9 percent this year. Developing countries are expected to account for all of the stock increase. Among exporters, Thailand and Viet Nam are forecast to close their marketing years with larger reserves, while these may shrink in India, Pakistan and the United States. Among importers, China is anticipated to increase its rice stockpiles. On the other hand, traditional importers, including Bangladesh, Indonesia, the Islamic Republic of Iran, Madagascar, Nigeria, Philippines and South Africa may end the season with smaller inventories.
After holding steady for much of 2013, international rice prices fell markedly in September. The FAO All Rice Price Index (2002-2004 = 100) shed 5 percent of its value that month to 226 points. The index dropped by a further 2 points in October and 1 point in November, when it averaged 223 points. The price weakness was most pronounced in the long-grain segment, where quotations were pressured by thin buying interest and prospects of large main-crop harvests in northern hemisphere countries. Because the price slide was particularly steep in Thailand, a salient development of the market in recent months has been the convergence of prices across major origins in Asia, which bears important implications for trade in the coming months.