Rice Market Monitor, July 2008 - NEW!
The Rice Market Monitor 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.
July 2008, Volume XI - Issue No. 2
ROUND-UP
Despite a poor start, the 2007 paddy season is estimated to have yielded a record production of 658 million tonnes, 2.5 percent above the previous year, with much of the gain accruing over the secondary crops, the planting of which coincided with the period of soaring prices.
While excellent 2008 crops have been harvested in the southern hemisphere, the 2008 main paddy crops are now at a critical stage of development in the northern hemisphere. Barring any major setback in the next few months, global paddy production in 2008 is forecast to rise by 1.5 percent to 668 million tonnes. Much of the expansion is expected in Asian countries, now forecast to gather some 605 million tonnes, 1.1 percent above the excellent 2007 production results. Sizable gains are foreseen in Bangladesh, India, Indonesia, the Philippines and Viet Nam, while the Islamic Republic of Iran, Japan, Turkey and, especially, Myanmar may face a contraction. With favourable growing conditions prevailing so far in Africa, production in the region is forecast to reach 23.7 million tonnes, 5 percent more than in 2007. Various initiatives to sustain production have been launched at the national and international levels, including an Emergency Rice Initiative for Africa, in June 2008. Production in Latin America and the Caribbean (LAC) is foreseen to stage a remarkable increase of about 8 percent, much of which concentrated in Argentina, Brazil, Colombia and Uruguay. In the rest of the world, production prospects point to some gains in the United States, while a decline is foreseen in Australia and the European Union (EU).
FAO’s forecast of global rice trade in 2008 now stands at 30.2 million tonnes, 1.4 million tonnes more than anticipated last April, but 4 percent below the 31.3 million tonnes traded in 2007, a reflection of the export curbs imposed by several exporting countries and of the high world prices prevailing since January, which have depressed import demand. Much of the expected drop in world rice imports would arise from lower purchases by Asian countries, in particular Bangladesh,Indonesia, Saudi Arabia, the United Arab Emirates and Yemen, more than compensating for larger deliveries to Iraq, the PDR of Korea, Malaysia, the Philippines and Sri Lanka. Imports to Africa are also expected to fall, while they are unlikely to change much in LAC. By contrast, Australia, the EU and the United States are all expected to purchase more. Much of the drop in world exports in 2008 can be attributed to the restrictive export policies implemented by several countries, in particular India, Egypt and, to a smaller extent, Viet Nam. Only part of these countries’ shortfalls is likely to be offset by larger sales by Cambodia, Pakistan, Thailand and the United States.
FAO’s still very preliminary forecast of global rice trade in 2009, at 30.0 million tonnes, shows little change from 2008. Imports by Asian countries are set to decline, much on account of Bangladesh, Malaysia and the Philippines. By contrast, imports by countries in Africa and the Near East, the EU and the United States are expected to rise, driven by expanding demand and a possible drop in world prices. As for exports, sales by Egypt, India, Pakistan and Viet Nam are forecast to rebound, as less restraining export measures are expected to be applied. By contrast, they may fall in Thailand, where the government procurement programme is sustaining prices, as well as in Argentina, Brazil, Cambodia, China and the United States. Unlike in 2008, trade in 2009 is expected to reflect primarily importers’ needs and be less constrained by exporting countries’ policies.
FAO’s forecast of world rice inventories at the close of the 2008 marketing seasons has been raised by about 4.0 million tonnes to 110 million tonnes, 1.7 percent larger than their opening level of 108 million tonnes, sustained by the good 2008 production prospects. From a trade status perspective, much of the stock-piling is forecast to be concentrated in the major exporting countries, with sizeable increases anticipated in China, India, Thailand and Viet Nam. Among major importers, Bangladesh, the Philippines and Japan could end the season with lower inventories, while Indonesia may record a strong increase, after two excellent paddy seasons.
Since reaching all-time high levels in May 2008, the strength in world rice prices have shown signs of abating in June and July, with the arrival of new rice paddy crops. This was reflected in the FAO all rice price index, which, by July, had lost 9 percent from its May 2008 peak. Despite the drop, prices in July were still more than 80 percent above their January 2008 values. In the coming months, rice international prices are expected to remain under downward pressure, especially if wheat prices keep falling. The slide may be limited, however, by the current policies in place in Thailand and Viet Nam, which will keep them from dropping below a floor level. In addition, several importing countries, in Africa and the Near East are expected to return to the market to contract new purchases, providing additional strength to the market. The pattern of the monsoon in the Northern Hemisphere Asian countries as well as developments regarding government policies, in particular export restriction by Egypt and India, will also weight heavily on world rice prices.
