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.

FAO Rice Market Monitor, January 2012, Volume XV - Issue No. 1

ROUND-UP

The 2011 paddy season is fairly advanced, although secondary crops in the Northern Hemisphere are still at the development stage. Since November, the forecast for global paddy production in 2011 has been lifted by 700 000 tonnes, mainly on improved prospects for crops in Asia. At the expected 721 million tonnes, world rice production would be 21.4 million tonnes, or 3 percent, larger than in 2010 and hit a new record. This excellent performance confirms the resilience of the sector and its ability to respond to attractive prices, even against the backdrop of  numerous  weather setbacks and widespread increases in basic input prices. Paddy production in Asia is forecast at 653 million tonnes, 3 percent above 2010, and 1.5 million tonnes more than anticipated in November. The revision reflects improved prospects especially for Pakistan, but also Cambodia, Nepal, the Philippines and Viet Nam, while expectations for China and Thailand deteriorated. Compared with 2010, particularly large production gains are to be witnessed by Bangladesh, China, India, Pakistan and Viet Nam, but the season may end negatively in Indonesia, Japan, the Republic of Korea, Myanmar, Sri Lanka and Thailand. In Africa, production is foreseen to reach 25.5 million tonnes, 1 percent up from 2010, driven largely by an expected rebound in Egypt and gains in Guinea, Nigeria and Sierra Leone. However, Mali, and Madagascar incurred severe contractions. The season was very favourable in Latin America and the Caribbean, where all the major producers, except Ecuador and Peru, harvested bumper crops. In Europe, North America and Oceania, sizeable gains were recorded in Australia and the Russian Federation but production fell in the EU and, notably, in the United States.

Global trade in rice in calendar 2011 is estimated to have reached an unprecedented level of 34.5 million tonnes, up nearly 3.0 million tonnes from 2010. All regions, except South America, purchased more, but countries in Asia (e.g. Bangladesh, China and Indonesia) and Africa (e.g. Egypt, Ghana, Nigeria, Senegal) drove the increase in world imports. As for exporters, shipments from India and Thailand surged. Sales by Argentina, Brazil and Viet Nam also reached record levels. By contrast, deliveries by China (Mainland), Egypt, Pakistan and the United States fell, largely reflecting reduced availability or high domestic prices.

FAO has lowered its forecasts of international trade in rice in 2012 by 1.0 million tonnes, as improved prospects for production in several major importing countries may weaken world import demand. At the forecast level of 32.8 million tonnes (milled basis), trade would be 5 percent lower than in 2011, with much of the decline driven by a cut of purchases by Bangladesh, Indonesia, Nepal, Nigeria and the Philippines. As for suppliers, uncompetitive prices may depress exports from Thailand, but supply constraints are seen also to curb shipments from Argentina, Brazil, Myanmar, the United States and Uruguay. Sales from Viet Nam may also fall short of the 2011 high. On the other hand, a full return to the market, following the lifting of the non-basmati export ban, may enable India to make up for part of these shortfalls, with Cambodia, China (Mainland) and Pakistan also forecast to step-up deliveries.

The strong expected gains in world rice production are foreseen to foster an 11 million tonnes or 2 percent increase of global rice utilization in 2011-2012 to 471 million tonnes, with average per caput rice consumption up 1 percent to 57.1 kg per year. They are also anticipated to bolster global rice inventories carried over in 2012 to 151 million tonnes (milled basis), 10 million tonnes more than in 2011 and the highest since 2000. At that level, reserves would be sufficient to cover 32 percent of anticipated world consumption, up from 30 percent in 2011. Exporting countries are set to account for much of the increase in world inventories, which would boost their stock-to-disappearance ratio from 20 percent in 2011 to 22 percent in 2012.

International rice export prices have followed a downward trend in recent months, with the FAO All Rice Price Index (2002-2004=100) shedding 7 percent since October to 235 points by the fourth week of January 2012. Quotations fell in all the rice market segments, pressured by harvests and fierce competition amongst suppliers to meet what was, nonetheless, a brisk demand. The Indica and fragrant rice markets were the most affected by this tendency, while Japonica rice quotations recovered in January. Yet, in spite of the recent downward trend, international rice prices in 2011 remained, on average, 10 percent above 2010, a reflection of the firmness that characterized markets between June and September. However, there was, a widespread tendency for price volatility to lessen in 2011. In the coming months, the market will be influenced by the progress of secondary crops in northern-hemisphere countries and of main crops along and south of the equator. These harvests could put additional downward pressure on export quotations, especially if current expectations of weakening import demand are fulfilled. In this context, decisions in major importing countries regarding the quantities and modalities of international purchases will continue to influence the market. On the export side, in addition to currency factors, the recent Thai decision to extend coverage of the Paddy Pledging Programme to the secondary paddy crop will continue to influence Thailand's competitiveness. Similarly, domestic distribution needs and the evolution of domestic prices in India will dictate how much the country will be able or willing to export.