MercoPress. South Atlantic News Agency

Turbulence ahead for world rice market as stockpiles plunge

El Niño causes droughts in Asia and floods in South America

Rice stockpiles of the world’s five largest exporters are forecast to plunge by a third to the lowest level in five years, and below last year when prices surged to a record, according to Concepction Calpe, senior economist at the UN Food and Agriculture Organization.

Global rice prices soared in 2008 amid declining inventories, sparking fears of a global food crisis. This prompted exporters including India and Vietnam to curb sales to cool inflation and cut supplies available for countries like the Philippines, the world’s biggest importer.

Total stockpiles held by Thailand, Vietnam, the US, Pakistan and India will fall to about 20 million metric tons at the end of the marketing year on Sept. 30, from 30 million tons a year earlier, on lower-than-forecast crops and rising demand for imports, Calpe said at a conference in Indonesia.

The weakest monsoon in India in at least seven years may cut the nation’s rice production by about 18% in the marketing year that began October first, Calpe said in an interview. Floods now affecting the south of India are also expected to reduce production.

The last time stockpiles of the five largest exporters fell by a third was in 2002-2003, when India “had a bad monsoon, and prices then were low,” Calpe said. Rough rice futures on the Chicago Board of Trade reached a low of 3.52 USD per 100 pounds in April 2002.

Prices surged to a record 25.07 USD per 100 pounds in April 2008 and have almost halved since then as farmers around the world rushed to boost production to a record last year, replenishing stockpiles and averting a shortage.

Tropical Storm Ketsana and Typhoon Parma destroyed at least 7% of the Philippines fourth-quarter crop in the past week and wiped out inventories in parts of the country. The Philippines may import 2 million tons of rice in 2010 to cover losses from the storms anticipated National Food Authority Assistant Administrator Jose Cordero.

Indonesia state food company Bulog said Oct. 6 the country may shelve plans for its biggest rice shipments in at least 50 years if dry weather caused by El Nino causes production to miss a state forecast of 40 million tons.

Higher reserves in China, the world’s largest grower and consumer, may help slow the decline in total global stockpiles to 3% to 117.4 million metric tons, Calpe said in an interview Oct. 7.

The impact of El Niño, which can delay rains in Asia and cause flooding in South America, may also push global production lower next year, forcing affected countries to draw down inventories, she said.

“Indonesia is especially at risk and Australia of course,” Calpe said, referring to El Niño. The weather phenomenon may also lower yields in South America “because if it’s cloudy, they won’t get the proper sun and that’s very important for yields.”

While the slump in Indian production will drag total volume down, not all of the major exporters will see output and stockpiles drop, Calpe said.

Rice production in Vietnam, the world’s second-largest exporter, may climb to a record of between 37.9 million tons and 38.3 million tons in 2010, Pham Van Du, deputy director general of Vietnam’s Cultivation Department, said yesterday.

That compares with a 2009 output estimate of 37 million metric tons by the US Department of Agriculture and a 2010 forecast of 36.05 million tons.