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, April 2012, Volume XV - Issue No. 2

ROUND-UP

Since January, the estimate of world paddy production in 2011 has been lowered by 1.4 million tonnes to 720.0 million tonnes (480.1 million tonnes, milled basis), reflecting deteriorating prospects in several countries, in particular Bangladesh. Yet, if confirmed, world output would surpass the already bright 2010 outcome by 2.5 percent, or 17.7 million tonnes. This would be a rather positive result, given the erratic climatic conditions that have characterized the season under the lingering la Niña, which, only now, is dissipating. Much of the 2011 expansion stemmed from gains in major Asian rice producing countries, especially India, where output surpassed 100 million tonnes of milled rice for the first time. Record crops were also harvested in Latin America and the Caribbean, while production in Oceania proceeded on a recovery path. These gains served to more than compensate for falling production in Africa, North America and Europe.

Turning to the coming season, FAO has set its first forecast of global paddy production in 2012 at 732.3 million tonnes (488.2 million tonnes, milled basis), 1.7 percent above the revised 2011 estimate. The year-on-year increase, equivalent to 12.3 million tonnes, partly rests on expectations of a return to more neutral weather conditions. It would rely mostly on a 1.6 percent expansion of plantings to 165.1 million hectares, as average yields are expected to remain steady at a relatively high 4.44 tonnes per hectare. Asia is mostly behind the 2012 projected increase in world production, with large absolute gains expected in Bangladesh, China, India, Myanmar, Pakistan, the Philippines and, especially, Thailand, where the sector is foreseen to recover from last year's disastrous floods. The outlook is also positive in Indonesia, Malaysia and Sri Lanka, which have already harvested their main 2012 crops. Production is expected to rebound in Africa, headed by Mali, Senegal and Nigeria, while Madagascar may incur a contraction, following the passage or landfall of successive storms since January. Prospects are rather subdued in Latin America and the Caribbean (LAC), where production is likely to slide by 7 percent from the 2011 record, after a combination of dry weather, falling rice prices and rising input costs depressed plantings, especially in Argentina, Brazil and Uruguay. In the other regions, drought and falling prices also prompted farmers in the European Union and the United States to shift to other crops, while Australia already garnered a bumper 2012 crop on ample irrigation water.

FAO's forecast of global rice trade in calendar 2012 has been raised to 34.3 million tonnes, 1.5 million tonnes more than foreseen in January. The new forecast reflects upwards revisions to imports, especially by China, Egypt, Indonesia and Senegal, while exports, mainly by India, Brazil, Pakistan and Uruguay, were scaled up. Nonetheless, at 34.3 million tonnes, 2012 world trade in rice would still fall 2 percent, or close to 900 000 tonnes, short of the 2011 record. This year's contraction is expected to be driven by faltering import demand in the major traditional markets in Asia, many of which just garnered large crops. By contrast, amid deteriorated output prospects, Africa is now foreseen to require greater deliveries. Imports by countries in Latin America and the Caribbean, Europe and North America are also expected to rise. The availability of ample and relatively cheap supplies is expected to allow India to increase rice exports and capture a larger share of the market. Australia, Cambodia, Pakistan and Viet Nam are also expected to sell more. India's resumption of non-basmati deliveries, after it lifted its 3-year export ban last September, is instigating growing competition and falling prices, a trend that is hitting Thailand's exports most negatively. Reduced availabilities may also depress sales by Argentina, Brazil, China, Myanmar, the United States and Uruguay.

Although FAO has lowered its forecast of world rice utilization in 2011/12 to 468.4 million tonnes (milled basis), this remains 2 percent above the previous year's estimate. The projected increase reflects expectations of continued growth in global consumption as food to 396.0 million tonnes, which translates into a modest gain in average per caput intake to 56.7 kilos. Under current prospects, global rice use in 2012/13 could rise by a further 2 percent to 477.0 million tonnes, with food consumption reaching 402.6 million tonnes and average annual per capita intake, 57.0 kilos. In 2013, world rice consumption could be heightened by falling prices in many regions but also by India's plan to widen the numbers of household eligible to subsidized grain distribution.

Since January, FAO has revised up its forecast of global rice carryover in 2012 by 1.8 million tonnes to 152.8 million tonnes (milled basis), which is 11.8 million tonnes above their opening level and sufficient to cover 3.9 months of projected global rice consumption. A further accumulation is preliminarily foreseen in 2013, when world rice carried-over are predicted to reach 164.3 million tonnes In both years, the stock replenishment is expected to concentrate in net rice exporting countries, mainly China (Mainland) and India, but also Thailand, where they are being boosted by public purchases under the pledging programme. Stocks held by importing countries as a group are expected to change little both in 2012 and 2013.

International rice export prices have remained on a steady to downward trend since January, as competition for shrinking markets, instigated by India's September lifting of its ban on regular rice exports, depressed prices in most origins. However, export quotations remain firm in Thailand, supported by government purchases. Under current prospects of ample availabilities, export prices could remain under downward pressure in the coming months, although that will also very much depend on the unfolding of the 2012 season, as well as policy decisions and currency factors.