Asian rice production lifts global supplies

Related tags Rice

A significant drive from Asian rice producers has helped boost
global paddy production in 2004 to an estimated record 611 million
tonnes. But the Food and Agriculture Organisation says that supply
is still not meeting needs, writes Simon Pitman.

The FAO​ says that the figure is 27 million tonnes higher than in 2003 and close to the record achieved in 1999, but despite this growing demands, particularly from large Asian nations such as India and China, means that production is continuing to fall short of consumption of demand, limiting the growth of international trade.

After four consecutive years of falling rice production, the December 2004 issue of FAO's Rice Market Monitor notes that most of this year's rice production increases are concentrated in Asia, especially in China but also in Indonesia. Further output gains are expected in Afghanistan, North Korea, Pakistan, Philippines and Vietnam, with a recovery also prospected in Japan and South Korea. By contrast, adverse weather conditions may cause outputs to fall in Bangladesh, Cambodia, India, Malaysia, Myanmar, Nepal, Sri Lanka and Thailand.

Overall rice production is also set to rise in Africa - reflecting good crops in Egypt, Madagascar and Guinea Bissau - and Latin America with excellent rice crops in Argentina, Brazil and Uruguay. But prospects are said to be rather bleak in Central America and the Caribbean due to drought and hurricanes. In the rest of the world, production is set to reach a new record in the Unites States; witness a recovery from the dramatic 2003 drought-induced shortfall in Australia; and end positively in the European Union.

Despite improved prospects for global rice production, world rice inventories would only reach 99 million tonnes at the end of the 2004 rice crop season, still 4 million tonnes less than in 2003. This means that, for the fifth consecutive year, production would remain short of consumption, with the difference covered with supplies drawn from stocks.

The FAO's forecast for rice trade in 2004 has been lowered by about 400 000 tonnes to 26.1 million tonnes, almost 6 per cent below the 2003 trade levels reflecting limited export availabilities in several of the major exporting countries, including China, India, Myanmar, Pakistan and the Unites States.

Part of these shortfalls is expected to be filled through larger exports from Thailand, now set to achieve an all time high of 10 million tonnes, and from Viet Nam, the FAO says. Sales by Argentina, While much of the anticipated contraction in trade in 2004 would be on account of lower imports to three of the major importing rice markets - Bangladesh, Brazil and Indonesia - by contrast most of the other major importing markets are foreseen to increase.

The first forecast for rice trade in 2005 points to a decline of about 900 000 tonnes to 25.2 million tonnes, stemming principally from current 2004 production prospects and supply constraints in some of the major exporting countries, especially Thailand, India and Uruguay. On the demand side, Brazil, China, Iran, Philippines and the Unites States are all anticipated to reduce their imports in 2005.

In general, rice export prices weakened in recent months, driving the FAO Rice All Price Index (1998-00=100) from 102 in September to 100 in November. Among the various types of rice, prices of Japonica rice have been most prone to fall, while quotations for aromatic rice have strengthened since September.

The FAO says that international rice price prospects in the coming months will depend to a large extend on the size and quality of the harvests currently under progress. However, with production setbacks anticipated in several of the major exporting countries, supplies available for trade in 2005 might be limited. As import demand is anticipated to remain strong, the current world rice price weakness is likely to be only temporary and quotations could regain momentum next year.

Related topics Markets Emerging Markets