Rome, Italy
April 2, 2008
Market situation remains
difficult in the short-term – lower rice trade
World rice production is expected to increase in 2008 by 12
million tonnes or 1.8 percent, assuming normal weather
conditions, FAO said today.
Production increases would ease the current very tight supply
situation in key rice producing countries, according to the
first FAO forecast for this year. International rice trade is
expected to decrease, mainly due to restrictions in main
exporting countries.
Sizable production increases are expected in all the major Asian
rice producing countries, especially Bangladesh, China, India,
Indonesia, Myanmar, the Philippines and Thailand, where supply
and demand are currently rather stretched. Governments in these
countries have already announced a series of incentives to raise
production.
Production outlook is also positive in Africa, where high world
prices may sustain a two percent growth, particularly in Egypt,
Guinea, Nigeria and Sierra Leone. Concerns about food import
dependency in the region have led to a mobilization of resources
towards the rice sector. Production is expected to recover
strongly in Latin America. Rice production in the European Union
is also expected to rise while it may contract in Japan, one of
the few countries where producer prices fell last year.
In the rest of the world, a dismal production is forecast in
Australia, reflecting extremely low water availability. A
reduced crop is also expected in the United States, mainly as a
result of a cut in area caused by mounting competition from more
profitable crops.
Short-term volatility
“The international rice market is currently facing a
particularly difficult situation with demand outstripping supply
and substantial price increases,” said FAO Senior Economist
Concepcion Calpe. “Higher rice production in 2008 could reduce
the pressure, but short-term volatility will probably continue,
given the very limited supplies available from stocks. This
implies that the market may react very strongly to any good or
bad news about crops or policies,” she added.
According to the latest FAO estimates, paddy production rose by
one percent in 2007 to 650 million tonnes, which implies that it
would be the second consecutive year where production growth
would fall short of population growth, resulting in a drop of
rice production on a per caput basis.
Trade
International trade in rice in 2008 is currently foreseen to
reach 29.9 million tonnes, 1.1 million tonnes lower than the
revised 2007 trade estimate. The very tight supply situations
that most exporting countries may face until the last quarter of
the year and the associated restrictions on exports lay much
behind the anticipated drop of rice trade in 2008. Currently,
China, India, Egypt, Viet Nam, four among the traditional rice
exporting countries, as well as Cambodia, have either imposed
minimum export prices, export taxes or export quotas/bans. Such
moves are expected to reduce rice exported from these countries.
As for imports, the drop reflects prospects of lower shipments
to Bangladesh, Indonesia and the Islamic Republic of Iran, as
supply and demand situation in those countries may ease somewhat
compared with last year.
Prices
Since January 2008 international rice prices have seen a steep
increase of about 20 percent, according to the FAO All Rice
Price Index. For instance, in March 2008 the high quality Thai
100% B was quoted US$ 546 per tonne, up 13 percent compared to
February and 68 percent higher than in March 2007.
Recent sudden price rises reflect the very limited supplies
available for sale, especially given the wide range of
restrictions imposed by key major exporting countries. The
tendency for further price rises, however, may diminish somewhat
in the next few months, with the arrival of new rice harvests in
Brazil or Uruguay but also in Bangladesh, India, Indonesia,
Thailand and Viet Nam. “So far, prospects regarding these crops
are positive,” Calpe said. |
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