FAO Rice Market Monitor, July 2015, Volume XVIII - Issue No. 2
The 2015 season is already well advanced south of the equator and approaching a critical period in the northern hemisphere, where climatic conditions, rainfall in particular, in July and August will very much influence yields of the main crops, but also the amount of water in reservoirs that will be available for the cultivation of the mostly irrigated secondary crops. Based on available information on plantings and climatic predictions for the coming months, FAO has downgraded its April forecast for global paddy production in 2015 by about 0.7 million tonnes to 749.1 million tonnes. The revision mainly takes account of adverse weather conditions in several countries, in the form of belated arrival and insufficient rainfall, often associated to the prevalence of an El Niño anomaly and its likely persistence until early next year. In absolute terms, the countries most affected by the downgrading of prospects were India, the Democratic Republic of Korea, Nepal, the Philippines, Thailand and Viet Nam. Outside Asia, crop forecasts were lowered substantially for the United States, but also Cuba. Only part of the downward revisions was compensated by improved output expectations, especially for China, Indonesia and Pakistan, but also Argentina, Brazil, Chad, Mozambique, Peru, Senegal and Uruguay.
At 749.1 million tonnes (499.3 million tonnes, milled), global paddy production in 2015 is forecast to stage a 0.9 percent (7.3 million tonnes, paddy) recovery from 2014, a season impaired by low precipitation and other climatic setbacks. The increase would mainly stem from growth in Asia, where paddy production may approach 678 million tonnes, 1.1 percent more than last year. The forecast expansion is driven foremost by Indonesia, now officially anticipated to harvest a record crop despite a difficult start of the season, and China, where the campaign is progressing well. Under current prospects of another bleak monsoon, India’s output is expected to recover only part of the losses incurred in 2014. Current outlooks also point to production increases in the Islamic Republic of Iran, Malaysia, Myanmar, Sri Lanka, Thailand, Timor Leste and Turkey, suggesting instead a contraction in Bangladesh, the Chinese Province of Taiwan, the Democratic People’s Republic of Korea, the Republic of Korea, Nepal, Pakistan, the Philippines and Viet Nam, amid a combination of unfavourable weather and/or unattractive prices. In Africa, output is forecast at 28.7 million tonnes (18.8 million tonnes, milled), 1 percent above the 2014 generally good performance. Much of the 2015 expansion is expected to concentrate in Western African countries, where, barring major setbacks, the sector is expected to continue expanding, but also in Madagascar, despite some weather-related hindrances. Increases in those countries will more than compensate for anticipated declines in Egypt and Nigeria. In the Americas, the 2015 season is already well advanced in Latin America and the Caribbean, where production is set to expand by 2.4 percent to 28.4 million tonnes (19.0 million tonnes, milled) compared to 2014, about 0.5 million tonnes more than forecast in April. The positive outlook reflects prospects of growth in South America, where following a challenging start, weather conditions have been favourable, especially in Brazil, Colombia, Paraguay and Peru. The outcome of the season is likely to be less positive in Central America and the Caribbean, where drought conditions might be exacerbated by a lingering El Niño. Prospects are also downbeat in the United States, where output may fall 6 percent below last year, on less attractive prices and a four year-long drought in California. In Europe, good crop results are anticipated for both the EU and the Russian Federation, unlike in Oceania, where Australia’s limited water supplies constrained plantings, curbing production by 12 percent.
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FAO has raised its forecast of global rice trade in calendar 2015 to 42.0 million tonnes (milled basis), which is nearly 700 000 tonnes above expectations in April. On the import side, the revision primarily reflects greater anticipated deliveries to Bangladesh, Colombia and the Philippines, reflecting, in the first two countries, a brisk pace of inflows in the first months of the year and, in the Philippines, government efforts to refurbish stockpiles in anticipation of possible production shortfalls arising from El Niño. Combined, these changes more than offset reduced import forecasts for the Islamic Republic of Iran, Yemen and Nigeria. On the export side, the revision in the world total reflects the improved outlook for India, whose pace of deliveries has continued unabated over the first quarter of the year, which more than compensated for less buoyant predictions of sales by Thailand and Viet Nam.
At the current forecast of 42.0 million tonnes, global rice flows in 2015 stand 2 percent, or close to 800 000 tonnes, short of the 2014 record. The expected trade contraction would be mainly demand-driven, coming in the wake of generally good crops in major rice importing countries. The expected fall also reflects the imposition by some governments of new protective measures, amid concerns about cheap imports undermining local production. The reduction of world imports in 2015 would be largely attributable to Asian countries, in particular Bangladesh, Indonesia, Sri Lanka and Timor Leste. Purchases by African countries are also expected to fall, depressed by currency depreciations and large carryovers from large imports in 2014. Elsewhere in the world, import demand is anticipated to remain firm in Latin America and the Caribbean, sustained by sizable purchases by Colombia, Cuba, Haiti and Panama. Strong domestic demand may also keep rice flows to Europe and North America at above-average levels, while Australia’s production shortfall is behind the expected rise of imports to Oceania. Viewed from the supply side, the predicted contraction in 2015 world exports mainly concerns India, where increasing domestic needs and disappointing production results in 2014 may result in tighter supplies for export. Likewise, Viet Nam’s official shipments may slide, falling to a six-year low, amid stiff competition with the other major suppliers. Tighter availabilities or uncompetitive prices are also expected to curb exports by Argentina, Australia, Brazil and Uruguay. By contrast, shipments from Thailand are forecast to remain around 10.9 million tonnes in 2015, unchanged from last year despite the relatively poor 2014 season results, as the auctioning of rice from the large public inventories this year will ease the supply tightness. On the other hand, exports by Cambodia, China (Mainland), Ecuador, the European Union, Guyana, Myanmar, Pakistan, Paraguay, the Russian Federation and the United States may increase.
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Forecasts of global rice utilization in 2015/16 have been upgraded by 1.5 million tonnes since April to 507.2 million tonnes (milled basis), on expectations of a greater use of rice for feed and industrial processing than last reported. The revised level would imply a 6.9 million tonne annual increase. Much of the predicted growth in world rice consumption in 2015/16 is still expected to be underpinned by greater consumption of rice as food. At a projected 419.6 million tonnes, world food intake would stand 5.8 million tonnes over year-earlier levels, sufficient to keep the global per-caput food use estimate stable at 57.4 kilos per person.
Forecasts of world rice stocks carried in 2016 have been lowered by 1.6 million tonnes since April to 169.4 million tonnes (milled basis). At a country level, the largest downward revisions concern India, but also Bangladesh, the Islamic Republic of Iran, Nepal, Thailand, the United States and Viet Nam. Under current expectations, global rice inventories in 2016 would fall 7.8 million tonnes short of their opening level, marking the second consecutive year of draw downs after nine years of uninterrupted accumulation¸ but still exceed pre-2013 levels. Mirroring these trends, the world stocks-to-use ratio is forecast to fall to 32.8 percent in 2015/16, down from 34.9 percent the previous year. However, with much of the offloading of inventories concentrated in the five major exporting countries, their stock-to-disappearance ratio would fall more markedly passing from 23.2 percent in 2014/15 to 19.0 percent in 2015/16, its lowest since 2007/08.
International rice export prices continued to soften in the second quarter of 2015, as reflected by the FAO All Rice Price Index (2002-2004=100) falling 3 percent below March values to 213 points in June. Across the various rice market segments, the tendency for prices to weaken was most evident in the fragrant market, reflecting a combination of subdued buying interest and large export availabilities from bumper harvests. Trends were more mixed in the long-grain segment, with a dearth of new sales driving a 3 percent slide in the Higher Quality Indica Index, while a combination of tight supplies for brokens and strong domestic demand in some major origins lent support to lower quality Indica rice quotations, keeping the respective Index close to March levels at 188 points. Meanwhile, weak buying interest prolonged the tendency for medium/short grain prices to subside into the second quarter, despite prospects of smaller crops in this segment.