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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.

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FAO Rice Market Monitor, December 2017, Volume XX - Issue No. 4

Release date: 19 December 2017

ROUND-UP

Since the October issue of the RMM, FAO has raised its forecast of world paddy production in 2017 by 2.1 million tonnes to 756.7 million tonnes (502.2 million tonnes, milled basis). The revisions primarily mirrors improved crop prospects for China (Mainland) and Myanmar, although Pakistan, the Philippines, Sierra Leone are all predicted to gather more than reported in October. Combined, these changes more than offset various downward revisions, the largest of which concerning Bangladesh and Madagascar.

At the revised level of 756.7 million tonnes, global paddy production would surpass the 2016 all-time high by a small margin of 0.2 percent. From a regional perspective, the comparatively stable outlook mirrors prospects of only modest output growth in Asia, where uneven rainfall patterns look set to temper area expansions promoted by continued state assistance and positive margins. Put together, countries in Asia are seen producing 684.2 million tonnes in 2017, up 1.4 million tonnes from the 2016 record. The largest absolute expansions in the region are expected to take place in China (Mainland), Indonesia, the Philippines and Thailand, but Cambodia, the Islamic Republic of Iran, Iraq, the Lao People's Democratic Republic, Malaysia, Myanmar, Pakistan and Timor Leste are all set to gather larger crops. The outlook is more subdued elsewhere, especially for South Asian producers that experienced a series of weather setbacks. This was namely the case of Bangladesh, Nepal and Sri Lanka and, to a lesser extent, India. Afghanistan, the Democratic People’s Republic of Korea, the Republic of Korea, Japan, Turkey and Viet Nam are all similarly set to face production declines this season.

FAO’s outlook continues to point to 2017 production in Africa exceeding the 2016 all-time high by 1 percent to reach 31.1 million tonnes. Generally favorable precipitation levels through September permitted producers in most West African countries to react to attractive prices and government assistance programs by expanding plantings. Prospects are also positive for Egypt, more than compensating for contractions in Burkina Faso, Gambia, Niger and, especially Madagascar and the United Republic of Tanzania, where crops were impaired by erratic rains.

Paddy production in Latin America and the Caribbean is predicted to recover by 7 percent in 2017 to a new high of 28.4 million tonnes. Conducive growing conditions boosted yields to all-time records in South America, more than offsetting area retrenchments triggered by tight producer margins. Production recovered the most in Brazil, but Colombia, Guyana and Uruguay all gathered more, offsetting reductions in Argentina, Bolivia, Chile, Ecuador and Peru. In Central American and Caribbean, growth prospects were partly undermined by hurricane damages this season, although Haiti, Honduras, Mexico, the Dominican Republic and Panama may end the season with positive results.

Elsewhere in the world, the latest figures confirm the negative outlook for the United States, where 2017 production is set to fall to its lowest since 1997, owing to competition with other crops and weather disruptions. In Europe, area cuts instigated by prospects of reduced margins are similarly set to depress production in the European Union and the Russian Federation, while ample and less costly water supplies for irrigation enabled 2017 output to stage a strong rebound in Australia.

Following a 1.2 million tonne upward revision, world trade in rice in calendar 2017 is now expected to stage an 11 percent annual rebound to an all-time record of 46.2 million tonnes. The more buoyant outlook primarily stems from expectations of a strong upturn in Asian imports, sustained by a record pace of purchases by Bangladesh, along with greater imports by the Islamic Republic of Iran, Iraq, the Philippines and Sri Lanka. Attractive international prices are also set to raise deliveries to Africa and Latin America and the Caribbean to new heights, while imports hold broadly elsewhere in world. On the export side, the recovery in global demand is mainly expected to be met by larger shipments from India, Myanmar and Thailand, although significant export recoveries are also envisaged to concern China (Mainland) and Viet Nam. Combined with greater exports by the European Union, the United States and Uruguay, these gains would more than compensate for export retrenchments in Argentina, Brazil, Egypt, Pakistan and Paraguay.

FAO’s forecast of world rice deliveries in 2018 now stands at 45.8 million tonnes, just 340 000 tonnes below the 2017 level and marginally above October forecasts. The comparatively upbeat outlook chiefly mirrors expectations that import demand will remain firm in Asia, owing to larger purchases by Indonesia, the Philippines and Saudi Arabia, in particular. Imports are instead seen stabilising in Europe and the United States, while they fall in Africa and Latin America and the Caribbean, deterred by ample local supplies and somewhat higher international prices. Among suppliers, India and Thailand are predicted to incur the sharpest export reductions in 2018, as tighter exportable availabilities could hinder their ability to compete next year. The outlook is also negative forArgentina, Uruguay and the Russian Federation, in view of expected output shortfalls. Conversely, deliveries by Viet Nam and Pakistan are seen making strong headways next year, with Australia, Brazil, Cambodia, China (Mainland) and Myanmar also envisaged to count on sufficient supplies to step-up shipments in 2018.

A total of 503.5 million tonnes (milled basis) of rice are forecast to be consumed around the world over the course of the 2017/18 season, up from 498.0 million tonnes in 2016/17. The 1 percent expansion is expected to be driven by higher food use, of around 406.7 million tonnes. On a per caput basis, this volume would put world consumption of rice as food at 53.9 kilos per person, up 0.2 kilos from 2016/17. Quantities destined to animal feed are projected to decline by 2 percent to 17.5 million tonnes, with another 79.4 million tonnes are used for seed, non-food industrial uses and post-harvest losses, unchanged from the previous season.

Consistent with the improved outlook for 2017 global production, FAO has raised its forecast of world rice inventories at the close of 2017/18 marketing years by 1.4 million tonnes to 170.5 million tonnes (milled basis). This level would represent a 1.1 percent increase from the 2016/17 record volume, resulting in a largely stable world stocks-to-use ratio of 33.4 percent. Rice importing countries remain forecast to account for all of the projected growth in global rice inventories. This would be namely be the case of China (Mainland), although Bangladesh, the Islamic Republic of Iran, Nigeria and the Philippines are all similarly envisaged to end their respective marketing years with larger reserves. Stock expansions in these countries would more than compensate for drawdowns in the major rice exporters, driven by cuts in Thailand and the United States, and for stock reductions in the Republic of Korea, Madagascar and Sri Lanka.

Although the last quarter of the year normally marks the onset of harvesting activities across major northern-hemisphere suppliers, international rice prices have continued to gain ground since October. This was reflected by the FAO All Rice Price Index (2002-2004=100), which passed from an October average of 216 points to 221 points in mid-December. Higher quality Indica and Japonica rice led the advance, rising by 3 percent, each, owing to stern import demand from South Asian and Far Eastern buyers, along with currency appreciations in some major rice exporters. Gains were in the order 2 percent for Aromatica supplies and of 1 percent for lower quality Indica rice, mirroring some downward pressure exerted in these segments by tepid buying interest and harvest progress. From an annual stance, these latest tendencies positioned the annual average FAO All Rice Price Index at 207 points, 7 percent higher than in 2016 and just short of its 2015 average of 211 points.

RMM December 2017

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