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India's absence will keep global rice prices up
FAO,June 23, 2004
The continued absence of India from the global rice market and an increasing demand from China will put pressure on the commodity's stocks and prices, the Food and Agriculture Organisation (FAO) has said.

"Tighter rice supplies in major exporting countries would reduce tradable volumes in rice," said Henri Josserand, FAO's chief for global information and early warning system.

"The downward trend in global cereal stocks continues, narrowing the buffer available to absorb large unexpected shocks. In view of already tight stocks, the possibility of higher and more volatile prices in 2004-05 should not be ruled out," he said in his latest Food Outlook Report.

The report has forecast a continued erosion of cereal stocks lowering the trade volume by 3.4 percent this year to an estimated 229.7 million keeping prices afloat.

The outlook is in keeping with FAO's Rice Market Monitor report for the first quarter of the year that has lowered its global trade forecast for the year from 26.1 million tonnes to 25.5 million tonnes, which is 2.5 million tonnes less than its 2003 estimates.

This was despite the outlook report pegging global cereal production estimates for the year at 1,956 million tonnes, substantially higher than last year. It forecasts the global rice output to increase 3.7 percent this year to 613.2 million tonnes over last year's estimated 591.6 million tonnes.

Underlining the continuing upward price movement, FAO's rice price index for the first quarter of 2004 appreciated to 104 as against 73 for the same period in 2003.

The report has revised the indices for the non-sticky Indica variety and the sticky Japonica varieties to 94 and 119 respectively from 72 and 66 the same period last year.

The index for aromatic rice has also appreciated by an impressive 10 points to 96 over the same period last year.

The Rice Market Monitor says: "The international rice prices are expected to keep a rising trend in the coming months especially as China intensifies its purchases."

"The year-to-year contraction reflects anticipation of smaller purchases against a backdrop of rising world prices and freight rates.

"Most of the traditional importers are anticipated to cut their purchases, with the possible exception of mainland China, which, in recent months, has been active in purchasing rice from neighbouring countries," it adds.

The report attributes the decline in global trade to an anticipated drop in supplies in exporting countries, some of which have taken steps to restrict exports.

"China, India, Myanmar, and the United States are all expected to reduce their shipments. Smaller food aid deliveries from Japan and the Republic of Korea are also anticipated," the report says.

India's absence has come as a boon for Thailand. The Southeast Asian country, which is the global leader in rice exports, is expected to export a record nine million tonnes of rice during the year ending June 30.

Thailand's record performance is attributed to a drop in Indian exports and an increase in Chinese imports, trade circles say.

Thailand sold 8.75 million tonnes to international buyers till April 2004, according to benchmark data published by the US Department of Agriculture's Foreign Agriculture Service.

Observers believe the country's exports will cross nine million tonnes by the time the current financial year comes to an end on June 30.

Thailand had exported 7.5 million tonnes of rice in 2003 and 6.38 million tonnes in 2002, according to the FAO.

India was practically out of the global rice trade after its food ministry stopped grain exports by August 2003 claiming the reserve stocks with its central food procurement agency Food Corporation of India had dwindled below the mandatory buffer levels.

Agriculture ministry sources have put the country's current stocks at 35.7 million tonnes as against the mandatory July 1 buffer norm of 24.3 million tonnes.

China remains net importer of rice for the second successive year as its declining production fails to keep pace with population increase, FAO statistics show.
MGR Archive 24.6.2004
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