2005 was a record breaking year for the world rice economy, according to the FAO Rice Market Monitor published today.

“For the third consecutive season, global paddy production experienced a brisk expansion, which lifted it to an all time high of 628 million tonnes. Growth reflected relatively favourable weather conditions in Asia, western Africa and South America and the positive effects of high prices in 2004, which had fostered a general increase in plantings,” according to the report.

Based on a first and very tentative forecast, global paddy production in 2006 could rise to 634 million tonnes, 6 million or 1% more than in 2005. However, forecasts will remain highly tentative, at least until August/September, when more information on the South-West monsoon in Asia will be available.

Trade

With regard to trade, tight domestic supplies in a number of countries confronted with production shortfalls in 2004 prompted a surge of global imports in calendar 2005 to a record volume of 29 million tonnes.

For calendar 2006, FAO forecasts have been lifted to 27.8 million tonnes, but they remain 4.1 percent lower than in 2005. The contraction from last year's exceptional performance is anticipated to be mainly import-driven, as demand by several major importing countries is expected to weaken, according to the report.

The FAO Rice Market Monitor is a service provided by FAO’s Commodities and Trade Division to facilitate access to and exchange of information of relevance to rice markets. It is published four to five times a year.

Source:
FAO Rice Market Monitor
March 2006, Volume IX - Issue No. 1
FAO Commodities and Trade Division
http://www.fao.org/es/ESC/en/20953/21026/21631/highlight_23001en.html

Overview

2005 was a record breaking year for the world rice economy. For the third consecutive season, global paddy production experienced a brisk expansion, which lifted it to an all time high of 628 million tonnes. Growth reflected relatively favourable weather conditions in Asia, western Africa and South America and the positive effects of high prices in 2004, which had fostered a general increase in plantings. Tight domestic supplies in a number of countries confronted with production shortfalls in 2004 prompted a surge of global imports in calendar 2005 to a record volume of 29.0 million tonnes. The expansion in trade in 2005 took place despite relatively tight export availabilities in Thailand and China (mainland), as reduced sales from these countries were more than compensated by increased shipments from the other major exporting countries, in particular India, Pakistan and Viet Nam.

At this time in the year, in March, the 2006 paddy season is well advanced in countries located south and along the equator, but sowing is only about to start in countries of the Northern Hemisphere. Based on the FAO first and very tentative forecast, global paddy production in 2006 could rise to 634 million tonnes, 6 million, or 1 percent more than in 2005. However, forecasts will remain highly tentative, at least until August/September, when more information on the unfolding of South-West monsoon in Asia will become available.

Paddy production in Asia is forecast at 573 million tonnes in 2006, 7 million tonnes more than in 2005. The increase reflects expectations of growth in Bangladesh, China, India and Viet Nam, while output may decline in Cambodia, Japan, the Republic of Korea and Sri Lanka, either driven by on-going policies to reduce production surpluses or, for those countries that benefited from particularly favourable conditions last season, by expectations of lower yields

Paddy output in Africa is anticipated to rise by 2.4 percent to 21.3 million tonnes in 2006, with much of the gain imputable to Nigeria where policies are supporting an expansion of the sector. By contrast, prospects for the season are negative in Latin America and the Caribbean, where output may drop by 2 million tonnes to 24.5 million tonnes. The contraction is foreseen to be concentrated in South America, especially in Brazil, Ecuador, Peru, Uruguay and Venezuela.

In the rest of the world, production may increase somewhat in the EU, although the impact of the full implementation, this season, of the partial disconnection of payments to producers from actual rice cultivation is uncertain. The production outlook is positive for the United States and, especially, for Australia, where the ending of the drought has enabled producers to double the area under rice.

FAO's forecast of trade in calendar 2006 has been lifted to 27.8 million tonnes, but it remains 4.1 percent lower than in 2005. The contraction from last year's exceptional performance is anticipated to be mainly import-driven, as demand by several major importing countries is expected to weaken. There seem to be less physical constraints on the exporter side, although governments could intervene to restrain supplies again this year in an endeavour to keep prices from falling.

The expected contraction of global rice imports in 2006 would be on account of smaller shipments to Africa, in particular Nigeria, which confirmed a ban on new import contracts in 2006. By contrast, larger volumes of rice are expected to be delivered to Asian countries, in particular to mainland China, Indonesia, Iraq, the Republic of Korea and Turkey, which would more than offset declining imports by Bangladesh, the Philippines and the Islamic Republic of Iran. In the other regions, Brazil, the EU and the United States are all expected to step up their purchases in 2006.

Global rice exports are forecast to decline this year, reflecting smaller expected shipments from India, Pakistan, the Rep. of Korea, Egypt, the United States and Uruguay. By contrast, exports from Australia, China, Thailand and Uruguay may rebound, while little change is foreseen for Viet Nam.

Global rice carry-over stocks at the close of the 2005/06 crop years are now estimated to remain very close to their opening level of 99 million tonnes, which might signal that the adjustment process initiated in 2000/01 has reached an end.

Despite the arrival on the market of rice from Northern Hemisphere countries' main crops, international rice prices were particularly buoyant in the first quarter of 2006. The FAO All Rice Price Index (ARPI), stable at 101 from June to December 2005, rose to 103 in January 2006, to 105 in February and to 106 in March. World prices may weaken in the coming months, when new crop supplies become available in leading exporting countries such as India, Viet Nam and Thailand, but also in several key importing countries. Policies conducted by the major exporting countries, in particular China, India, Thailand and Viet Nam may, however, thwart the tendency for them to fall.