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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.

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, December 2014, Volume XVII - Issue No. 4

ROUND-UP

With the 2014 season fairly advanced, firmer crop estimates have been issued, which have resulted overall in a slight increase of 250 000 tonnes in the global paddy production forecast. At country level, prospects for the 2014 season output have improved since the October release of this report, particularly for China, Indonesia, the Republic of Korea, Nigeria, and Viet Nam. The higher figures more than compensated for a downgrading in India, hit by the cyclonic storm Hudhud, and in the Democratic People's Republic of Korea and Thailand, which both endured severe precipitation shortfalls. Disruptions to agricultural activities caused by the Ebola outbreak also worsened prospects for Guinea, Liberia and Sierra Leone. At 744.7 million tonnes (496.6 million tonnes, milled basis), the resulting 2014 global production forecast would be slightly (0.2 percent) lower than the 2013 level, reflecting a 0.1 percent contraction of both plantings and yields to 162.9 million hectares and 4.57 tonnes per hectare, respectively brought about by unfavourable weather conditions.

The anticipated year-to-year drop of global production in 2014 very much reflects negative expectations in Asia, where the season is anticipated to close with a minor 0.5 percent decline to 674.4 million tonnes (449.8 milled basis). Indeed, widespread climatic setbacks were endured in the course of the season, which are expected to result in substantial production declines in India, Indonesia, Nepal, Sri Lanka and Thailand. By contrast, Bangladesh, China, Myanmar and Viet Nam are all expected to post sizeable gains. Current prospects point to a positive, albeit modest, production growth in Africa, underpinned by a rebounding of output in the Eastern and Southern parts of the region, driven mostly by a recovery in Madagascar, and continued progress in the United Republic of Tanzania. By contrast, output is projected to contract in North Africa, on account of Egypt, and in Western Africa, reflecting the combination of poor rains and of the Ebola outbreak. In Oceania, limits on water allocation have resulted in plummeting production in Australia. By contrast, good crop results in such countries as Argentina, Brazil, Cuba, Guyana and Paraguay have helped sustained a 1 percent increase of output in Latin America and the Caribbean. A similar pace of growth is expected in Europe, despite a 3 percent retreat in the EU, reflecting an excellent performance of the sector in the Russian Federation. Results are likely to be even more buoyant in North America, where the United States is heading towards a 16 percent output recovery.

While several countries in the Northern Hemisphere still have to harvest their 2014 secondary crops, along and south of the equator, producers are already engaged in sowing their first 2015 crops. Although very preliminary, prospects for 2015 production in the latter countries are mixed: while in Argentina and Uruguay high production costs and/or excess precipitation may deter plantings, the area under rice is expected to expand in Bolivia, Chile and Paraguay in 2015. In Asia, Indonesia’s government recently announced a paddy production target of 73.4 million tonnes (46.2 million tonnes, milled basis), which would imply a 4 percent increase from 2014. In Sri Lanka, production is set to recover, following a return of the rains. In Africa, prospects for Madagascar and Tanzania are positive, barring any major setback. On the other hand, official forecasts point to an 18 percent output contraction in Australia, as water allocations have again been curtailed and their prices heightened.

Since October, FAO has raised its forecast of international trade in rice in calendar 2014 by some 500 000 tonnes to 40.2 million tonnes, primarily on higher expected imports to Bangladesh and Guinea, and, based on reported shipment progress, also to Djibouti, Sri Lanka, Turkey and Zimbabwe. Import forecasts were instead lowered for the Republic of Korea and the Islamic Republic of Iran, with revisions to historical estimates also entailing cuts in import figures for Egypt. On the export side, these changes were met with more buoyant sales mostly by Thailand, but also Viet Nam. Rice deliveries in 2014 by Brazil and Pakistan were revised down. At the new forecast level of 40.2 million tonnes, 2014 world trade in rice would be 8 percent larger than in 2013 and hit a new high. The increase rests mostly on growing imports in the Far East, where important buyers face poor harvest results and/or high local quotations. Competitive world prices are also behind steady increases in rice imports by countries in Africa, but also in Latin America and the Caribbean, Europe and North America. Among exporters, 2014 is marking a resurgence of Thailand as a leading rice supplier. Brazil, Guyana, Pakistan, Paraguay and Uruguay are also expected to ship more rice over the year. Much of these increases are anticipated to come at the expense of deliveries by India, but also Australia, Cambodia, China (Mainland), the European Union and the United States, with expectations also pointing to shipments by Viet Nam stagnating at relatively low levels.

FAO forecasts world trade in calendar 2015 at 40.5 million tonnes, implying a small 0.6 percent growth from the current 2014 estimate. On the demand side, the expansion reflects expectations of continued increases of imports by countries in Africa and Latin America and the Caribbean, amid a combination of poor harvests and/or fast-expanding consumption bases. By contrast, deliveries in North America and Europe are seen falling, while stabilizing at high levels in the case of Asia. Looking at the suppliers, Thailand is expected to dominate the market, with its deliveries climbing to new heights. Cambodia, China (Mainland), Guyana, Myanmar, Pakistan, Paraguay and the United States are also envisaged to ship more, while in the context of steadfast competition for markets, deliveries by Argentina, Australia, Brazil, and especially India could be undermined by less attractive prices.

World rice utilization in 2014/15 is currently projected at 500.5 million tonnes (milled basis), 200 000 tonnes less than forecast in October, but still 1.9 percent above the 2013/14 estimate. About 83 percent of utilization, or 415.4 million tonnes, would correspond to food intake, while feed would absorb 14.5 million tonnes, or 3 percent of the total, with the remaining 70.6 million tonnes, or 14 percent of utilization accounted for by seeds, non-food industrial use and waste. On a per capita basis, food consumption would be up slightly from 57.3 kg in 2013/14 to 57.5 kg in 2014/15, in spite of high retail prices prevailing in most regions compared with last year.

For the first time in a decade, in 2014/15, global rice utilization is predicted to surpass production, resulting in a 3.8 million tonne drawdown of global rice stocks in 2015 to 177.5 million tonnes. The offloading would mainly concern exporting countries (India, Myanmar, and Thailand), but inventories may end smaller also in some major importing countries, such as Indonesia. Despite the decline, world reserves will remain high, with the stocks-to-use ratio estimated at 34.8 percent in 2014/15, down from 36.2 percent a year earlier, but sufficient to cover more than four months of requirements.

International rice prices, which have been steadily falling since September 2014, lost further ground in November. Particularly steep falls have been evident in the aromatic rice segment, amid prospects of large availabilities coupled with reduced import demand. Indica rice prices have also been under much pressure, reflecting a sluggish import demand and the arrival on the market of newly harvested crops. Quotations in all of the major origins have been falling, especially those of India, Pakistan and Viet Nam. Prices also fell in Thailand, although the decline since September was less than witnessed in competing countries, as a cautious release of public stocks helped contain the slide.

RMM December 2014

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