Rice Market Monitor, September 2009
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.
September 2009, Volume XII - Issue No. 3
ROUND-UP
FAO’s June forecast of global paddy production in 2009 has been downgraded by 21.3 million tonnes to 668 million tonnes, which would be 3 percent less than in 2008. Much of the revision reflects unfavourable climatic conditions in northern hemisphere Asian countries, which are about to harvest their main 2009 paddy crops. Despite the anticipated decline, paddy production in 2009 would still be high, second only to the record hit in 2008.
Delayed progress of monsoon rains and erratic precipitation patterns are behind a worsening of the 2009 production outlook in Asia, now forecast to gather 601 million tonnes of paddy, 22 million tonnes or 4 percent, less than in 2008. Besides India, where the drop is likely to be particularly pronounced, the Chinese Province of Taiwan, Iraq, Japan, the Republic of Korea, Nepal, Pakistan, Sri Lanka and Thailand may also face declines. On the other hand, prospects are positive in Afghanistan, Bangladesh, Cambodia, China mainland, Indonesia, the Islamic Rep. of Iran, Malaysia, Lao PDR, Myanmar, the Philippines and Viet Nam.
Despite less favourable growing conditions this season, paddy production in Africa is set to remain close to the outstanding 25.4 million tonnes gathered in 2008, reflecting an expansion drive from governments and renewed interest in the sector from both institutional and private investors. Particularly good crops are forecast in Madagascar and Mozambique, as well as Mali and Nigeria. By contrast, drought impaired crops in the eastern part of the continent, while restrictions on water use depressed plantings and production in Egypt.
In Latin America and the Caribbean, prospects are excellent, with paddy output forecast to rise by 4 percent to 27.5 million tonnes. In Central America and the Caribbean, larger crops are expected in Cuba and the Dominican Republic. In South America, where the 2009 is coming to a close, large gains in Bolivia, Brazil, Chile, Colombia, Peru and Venezuela are expected to largely offset declines in Argentina, Guyana, and Uruguay. In the other regions, paddy production is projected to expand in the EU-27 and the United States. Although above the dismal 2008 result, 2009 production in Australia remains well below early 2000s’ levels.
Global rice trade in 2009 is forecast to rebound by 2 percent to 30.7 million tonnes. The recovery would be mostly on account of greater imports by the Philippines, the EU-27 and countries in the Near East (the Islamic Republic of Iran, Iraq and the United Arab Emirates). By contrast, deliveries to Bangladesh, Indonesia, Malaysia, Sri Lanka and Turkey, but also to countries in Western Africa, are set to fall, often sharply. As for world exports in 2009, these are expected to be boosted by greater shipments from Argentina, Brazil, Egypt, Myanmar and, above all, Viet Nam, where they may hit a record. These gains should more than compensate for lower sales from China, India, Pakistan, the United States and Thailand.
Based on current expectations, FAO’s first forecast of rice trade in 2010 stands at 30.3 million tonnes, 1 percent less than foreseen in 2009. The near 400 000 tonne fall would arise from weaker import demand from major rice importers, mainly Brazil, Indonesia and the Philippines, amid favourable production prospects. On the export side, an anticipated tightening of supplies and less attractive world prices may result in reduced shipments from India and Pakistan, but also from Viet Nam, Egypt and the United States. However, China, mainland, Thailand, Cambodia and Myanmar could increase their exports.
Given the excellent production results over the 2008 season that just concluded, FAO’s forecast of global rice inventories carried over in 2009 has been raised to 121.4 million tonnes, nearly 12 million tonnes, or 11 percent, above the previous year’s and the highest since 2002. Stocks are expected to be built up in several major importing countries, especially Bangladesh, the Republic of Korea, the Philippines and Indonesia, but also in rice exporting countries such as China mainland, India, Pakistan, Thailand and the United States. At the forecast level, world rice reserves would cover roughly 3.2 months of global rice utilization, with the stocks-to-use ratio now estimated at 27 percent. On the other hand, a preliminary forecast of closing stocks in 2010, points to a 3 percent decline to 117.4 million tonnes, as reserves will need to be drawn down to cover the anticipated 2009 production shortfall.
International rice prices remained generally steady in July and August but fell markedly across all market segments in September 2009, when the FAO All Rice Price Index (2002-2004=100) ended at 232 points, 20 points below June. Since the beginning of 2009, the Index has averaged 257 points, 45 points below its January-September 2008 value. Although expectations of below average crops in major exporting countries and the weakening of the US dollar is giving some support to international rice prices, the arrival of new supplies in coming months may cause them to slide further. However, actions by governments will remain of foremost importance. For instance, market players are likely to keep a close watch on how the large public stocks are administered in Thailand, but also on the effects of the new price insurance scheme soon to be launched in the country, which may lower Thai export quotations. Last but not least, the continued fall in international wheat prices, which in September had lost 30 percent year-on-year, may exert further downward pressure on world rice prices.
