Rice Prices May Rise Next Yr As Weather Hits 09 Output

5:05 AM, octubre 9, 2009
NUSA DUA, Indonesia (Dow Jones)--Ample rice stocks in major producing
countries such as Thailand could keep the lid on prices in the near term, but
an expected increase import demand from the Philippines following typhoons
Ketsana and Parma and lower production in India and Vietnam due to adverse
weather will likely lend support to the market going into next year, traders
and officials said at a major industry conference in Bali.
Global milled rice production in 2009 is expected to fall 3% on year to 446
million metric tons, a senior Food and Agriculture Organization economist said
Friday.
"Adverse weather in several big producing countries, notably India and the
Philippines, is the main reason behind the expected fall in production," said
Concepcion Calpe, senior economist at FAO, an agency under the United Nations.
Speaking at World Rice Commerce 2009, Calpe said in 2010, global milled rice
demand is likely to increase by 5 million tons to 453 million tons.
Rising demand and lower production will result in a decline in global milled
rice stocks of around 4 million tons to 5 million tons next year, from around
121 million tons now, she said.
Prices in the world's top two exporting countries - Thailand and Vietnam -
could ease marginally on high inventories now, before rising slightly next
year, participants said.
"Thai prices are likely to fall from the current $525 a ton level as there is
going to be more rice coming onto the domestic market when the old intervention
program is finally scrapped, but I don't think prices will fall below $400 a
ton (for Thai 5% broken). We may see $420-$430/ton in the coming months but not
much lower," said Chookiat Ophaswongse, president of the Thai Rice Exporters
Association.
Vietnam's equivalent grade is currently selling around $400/ton, but that
could rise next year, with the country still assessing damage to paddy in the
central region, following Typhoon Ketsana.
"There are milled rice stocks in private and government hands of around 1
million tons, so prices are unlikely to rise immediately, although the damage
to paddy is still being assessed," said Nghiem Huy Doan, vice director of
Hanoi-based Vipfood Trading.
Storm Damage May Push Philippine Imports Higher
Officials said damage to paddy in the Philippines in the wake of typhoons
Ketsana and Parma, likely means the country will increase imports by at least
an additional 1.4 million metric tons of milled rice this year.
"We will have to import 1.4 million tons of rice to compensate for storm
damage to paddy, but that's a conservative, initial figure. We will probably
have to import more; we won't know until a full assessment is carried out in
the coming weeks," said Jose Cordero, administrator of the National Food
Authority's marketing operations department.
According to the latest assessment by the Agriculture Ministry, the
Philippine farm sector incurred storm damage of around PHP7.94 billion ($170
million). Rice fields were the worst hit, with initial production losses
estimated at more than 375,000 tons.
With this year's rice imports already at 1.775 million tons, another 1.4
million tons of imports could take the final figure to nearly 3.2 million tons,
up 39% from last year's record 2.3 million tons, making the country the world's
biggest rice importer.
High Global Stocks Hold Prices Down For Now
Officials said a spike in rice prices to more than $1,000/ton in 2008 amid
supply worries then encouraged producing countries to boost output and
consuming countries to bolster food security measures by increasing inventory.
Thailand, the world's largest rice exporter, is expected to ship 9 million
metric tons of milled rice in 2009, exceeding a previous government target of
8.5 million tons, Chookiat said.
"In the January-August period, Thailand exported 5.2 million tons of milled
rice. Exports to Africa have improved in recent months and will likely remain
strong as long as India keeps its export ban," he said
However, he noted Thailand has lost some market share this year as Vietnam
has been selling rice at lower prices on the back of an increase in production.
"The financial crisis has changed the landscape - people are looking for
cheaper rice."
Thai white rice exports in the January-August period fell 58% while parboiled
rice exports to Africa rose more than 50%, Chookiat said. Exports of white
broken rice and gluttonous rice have also risen.
Traders in Thailand have said government stockpiles are still at
unprecedented highs of 6 million-7 million tons of milled rice, with the next
harvest due in November expected to yield as much as 24 million tons of paddy,
around 1 million tons higher than last year.
-By Andrew Jones, Dow Jones Newswires; andrew.jones@dowjones.com; +65 6415
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