FAO Rice Market Monitor, July 2014, Volume XVII - Issue No. 2
With northern hemisphere countries about to complete the collection of their secondary paddy crops, the 2013 season is virtually over. Based on its latest assessment, FAO has heightened its April estimate of global paddy production in 2013 by 2.1 million tonnes to 747.0 million tonnes (498.0 million tonnes, milled basis), with much of the revision arising from a better performance than previously anticipated in Asia, especially for Bangladesh, China (Mainland), India, Iraq, Myanmar, Pakistan and Sri Lanka, but also in Western Africa, for Chad and Mali. The resulting 1.5 percent year-to-year increase is above the 1.1 percent growth predicted in April, but still falls short of the long-run pace of 2.0 percent registered since 2000. All of the expansion in 2013 production is estimated to have stemmed from an enlarged paddy area, as yields declined slightly.
Unlike for 2013, FAO's forecast for global paddy production in 2014 has been downgraded somewhat since April, by 120 000 tonnes, to 750.9 million tonnes (500.7 million tonnes, milled). At that level, it would stand only 0.5 percent, or 3.9 million tonnes, above the revised 2013 estimate. However, even more than usual at this time of the year, the outlook is shrouded with uncertainty, under a looming El Niño, as the impact of the weather anomaly on crops will very much depend on its timing and intensity. For instance, if El Niño resurfaces in the last quarter of the year, it would have limited effects on the main 2014 paddy crops, which, by that time, would have already been harvested. The consequences would be stronger on the 2014 secondary crops in northern hemisphere countries and on the first 2015 crops in southern hemisphere countries, both of which will be planted late in 2014 or in the first part of 2015. Even with this caveat, prospects for the 2014 season were already marred by a slow establishment of the seasonal rains, which renders rainfall performance in the coming months particularly critical. Although little changed globally since April, expectations over production in 2014 have been subject to major offsetting changes at the country level. In particular, the outlook worsened for India, Indonesia, the Philippines and Sri Lanka, but also for Argentina, Australia, Brazil, Colombia, Ecuador and Senegal, reflecting, in most cases, drought or untimely rainfalls. Instead, FAO upgraded its forecasts for crops in China (mainland), but also in Bangladesh, Cambodia, Chad, Egypt, Iraq, the Lao People's Democratic Republic, Mali, Myanmar, Pakistan, Peru, the Russian Federation, Sierra Leone, the United Republic of Tanzania and Viet Nam.
Across the various regions, Asia is anticipated to garner about 679 million tonnes in 2014, a volume only 0.2 percent, or 1.1 million tonnes, higher than in 2013. Such a meagre growth reflects expectations of a poor season in India, but also in Indonesia, Nepal, Sri Lanka and Thailand, all of which might face year-on-year contractions. By contrast, Bangladesh, China (Mainland), Myanmar, Pakistan, the Philippines and Viet Nam are anticipated to see production expand, often underpinned by additional government support. The outlook is far more positive in Africa, which is anticipated to see production leap by 3.8 percent, or 1 million tonnes, to 28.3 million tonnes (18.5 million tonnes, milled). However, much of the region's expected growth reflects a recovery in Madagascar from its dismal 2013 performance, as crops in the country have benefited this season from adequate precipitation and a reduced incidence of pests. The outlook is also much improved for Eastern Africa, now set to gather 3 percent more than in 2013, with more modest gains anticipated in West Africa. In Latin America and the Caribbean (LAC), production is forecast to reach 28.6 million tonnes (19.1 million tonnes, milled basis) in 2014, which, while some 600 000 tonnes lower than envisaged in April, are still 1.3 percent above the 2013 outcome. Prospects deteriorated, especially for Brazil, but also Argentina, Bolivia, Colombia and Ecuador, where the 2014 main crops have already been harvested. Yet, year-to-year increases in output are still expected in Argentina, Brazil, Cuba, Guyana and Paraguay, while unfavourable rains and/or subdued price expectations are expected to depress output in Bolivia, Colombia, Ecuador, Peru and Uruguay. In Europe, production is predicted to remain stable in the European Union around the 2013 contracted level, as improved yields compensate for a shrinking area, while a recovery is officially expected in the Russian Federation. In North America, the latest forecast by the USDA points to a 19 percent year-on-year recovery, boosted by a 23 percent increase in cultivation, and notwithstanding a late start of the season caused by unseasonable rains and below-average temperatures. In Oceania, official estimates in Australia, which already concluded the season, point to a 29 percent decline from the excellent 2013 turnout, reflecting insufficient irrigation water, which constrained plantings.
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FAO has raised its forecast of global trade in rice in calendar 2014 by about 100 000 tonnes since April. However, behind the relatively small change at the global level lie important revisions to individual country' trade figures. On the import front, deliveries to Bangladesh, Indonesia and the Philippines were raised substantially, while those directed to China (Mainland), Thailand, the United Republic of Tanzania and Viet Nam were lowered. As for suppliers, exports by India, Pakistan and Thailand were forecasted higher, whereas those by Cambodia, the United States and Viet Nam were cut down.
Based on its latest forecast, FAO now projects global trade in rice to reach 39.4 million tonnes in 2014, an outstanding 6 percent increase from the depressed 2013 level and a new record. The 2.3 million tonne expansion would be underpinned by strong import demand, mainly in Asia, where key markets, such as Bangladesh and the Philippines, are stepping up purchases abroad in an attempt to rebuild inventories and/or quell inflationary pressure. On the backdrop of production shortfalls and attractive world prices, purchases by countries located in Africa and Latin America and the Caribbean are also envisaged to rebound strongly, with further gains anticipated in North America, Europe and Oceania. On the export side, Thailand is projected to capture much of demand growth in 2014, reflecting an easing supply situation and competitive prices, following the suspension of the paddy pledging program and large offloads from public warehouses. Larger shipments from Thailand would partly displace deliveries by India, which, nonetheless, are envisaged to remain large. Similarly, Argentina, Brazil, Egypt, Guyana, Pakistan, Paraguay and Viet Nam, are all expected to expand deliveries over the year, whereas the export outlook for Australia, Cambodia, China (Mainland), the European Union, the Russian Federation and the United States has been dampened by staunch competition for markets and/or by production shortfalls.
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Global rice utilization in 2014/15 is set to expand by 2.2 percent to a new high of 502.3 million tonnes (milled basis), sustained mainly by demand for food but also for other uses (seeds, post harvest losses and non-food industrial uses). The anticipated expansion in food consumption in 2014/15 is in spite of firm retail/wholesale prices across much of Asia (with the exception of Cambodia and Thailand). In several important countries, governments control of retail prices and a widening of subsidized rice distribution will sustain rice consumption. Based on the latest projections of population, the global per caput food rice intake will remain stable around 57.6 kilos per person.
Since the April issue of the RMM, FAO has raised its forecast of global rice stocks at the close of marketing years ending in 2014 by almost 1.0 million tonnes, now pointing to a high in global inventories of 181.4 million tonnes. World rice carryovers in 2015 were also assessed more than 200 000 tonnes higher than last reported, at 179.7 million tonnes. The revised forecast still suggests a year-to-year contraction in world rice reserves for the first time in a decade, albeit by a small margin of 0.9 percent. As a result, the world stocks-to-use ratio would pass from an 36.1 percent in 2013/14 to 35.1 percent in 2014/15.
International rice prices have been relatively stable in recent months, with the FAO All Rice Price Index (2002-04=100) largely steady since March 2014 around 237 points. This apparent stability masked diverging price trends across the various rice segments and sources. While aromatic prices were largely unvaried over the past three months, Japonica prices dipped between March and July, reflecting easing concerns about the US crop. This compensated for partial recovery in Indica quotations since June, supported by brisk import demand and a tightening of supplies, associated with a temporary suspension of stock sales in Thailand. As a result the benchmark Thai white 100% B export prices recovered somewhat, reaching USD 432 per tonne in July, a level that compared with USD 542 per tonne in July 2013.