Developing Countries Will Lead Global Rice Import Growth in 2013-22, Says USDA Rice growers positive California MG prices are UP Russia MG Harvest coming to end Egypt open rice exports Vietnam’s rice export in tough competition with India Thai rice exports in May Rise Above Target This Year Viet-Nam Rice exports likely to fall this year
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Global Rice Prices May Rise On Tighter Supply
Dow Jones
Global rice prices will remain strong in 2005 due to a combination of bullish factors that include tight supply, the possible emergence of an El Nino weather phenomenon that could reduce production, and a government price support program in Thailand, the world's leading exporter of the grain, market participants said.

"The market is anticipating the emergence of an El Nino, which if confirmed would mean that (rice) prices will continue to go up. Indonesia, Philippines, Bangladesh and other countries will be importing more," said Vichai Sriprasert, president of the Rice Exporters Association of Thailand.

But even without the ill-effects of an El Nino-induced drought, global supply is expected to fall in 2005, and could lead to strong export prices, said Mamadou Ciss, managing director of Geneva-based Ascot Commodities, NV, a leading global rice trading company.

Thailand is estimated to export a record high of 10 million metric tons of rice in 2004, but the government has said 2005 exports will fall to around 7 million to 8 million tons because of limited supply.

Government stocks in Thailand is already at a low level as the state sold as much as 3 million tons from its stocks in 2004. To make things worse, dry weather conditions affecting 54 of Thailand's 76 provinces will likely damage up to 1 million metric tons of rice paddy, limiting exportable surpluses, Vichai said.

The drought currently affecting Thailand, as well Vietnam and southern China, isn't believed to have been caused by the El Nino anomaly, but could be a prelude to one.

According to Ciss, rice exports from Vietnam, estimated to reach 4.2 million tons in 2004, won't exceed 3.5 million tons in 2005.

India, China To Export Less Rice In 2005

Analysts expect Chinese rice exports, estimated to fall by 2 million tons in 2004 and Indian exports, estimated to fall by 1.5 million tons, to continue the downward trend in 2005.

The withdrawal of government subsidies for exporters and erratic rains that damaged crops in many parts of the country will reduce India's availability for exports in 2005, they said.

But an anticipated firmness in global rice prices in 2005 could prompt the government to reinstate the subsidy to rice exporters, said Gurnam Arora, co-chairman of Satnam Overseas Group, a leading rice exporting company, based in New Delhi. The subsidy translates to around $15/ton, he added.

India was the world's second largest rice exporter in 2002, shipping 6.7 million tons. But exports declined to 4.3 million tons in 2003, and is estimated to be further down at 2.8 million tons in 2004.

Current trends in China indicate the country may even become a net importer of rice in 2005, despite a projected higher paddy rice output in 2004, Ciss said.

China traditionally imports only fragrant rice and other high-grade varieties such as basmati, but in a significant shift, imports in 2004 also included more commonly used varieties.

"Unless China is sitting on strategic stocks which we don't know about, the country may become a net importer in 2005," Ciss said.

Anthony Lam, regional general manager of the Hong Kong-based Golden Resources Development International Ltd., a rice milling, trading and distribution company, however, holds a different view.

China's 2004 year-end stock is estimated around 42 million tons, which should be enough to meet domestic demand and even maintain rice export trade, Lam said. "I wouldn't be surprised if China exports around 2 million tons in 2005 but imports will be less than this year's 700,000 tons."

Meanwhile Indonesia, which was Asia's largest rice importer prior to 2004, may continue to be a major importer, Ciss said.

Indonesia has estimated its 2004 rice output at 53.7 million tons, up 1.5 million tons from output in 2003, but Ciss says actual production could fall short of that by at least 1 million tons. "Based on a crop survey commissioned by Ascot, Indonesia may have miscalculated their output (for 2004)," he said.

Indonesian rice imports fell in 2004 following a temporary import ban, which was later extended till the end of the year.

Tight Supply To Raise Export Prices

Given these bullish factors, export prices could rise further from the already high levels in 2004, market participants said.

Without an El Nino occurrence, the price of Thai 100% grade B, which was between $250-$275/ton in November, may surge in 2005 to as high as $325-$350/ton, Ciss said.

However, he said there could be resistance once prices of this variety reaches the $335/ton-level, unless prices of U.S. grade 2 or 4% broken rice, which is comparable to Thai 100% grade B, also rise simultaneously.

In the event of an El Nino-induced drought, the upward movement in prices will be greater as it could potentially ravage crops across Asia, which accounts for around 75% of the world's exportable supply, he said. That could push the price of Thai 100% grade B to $400/ton, FOB or even higher, he added.

An ongoing market intervention program in Thailand could also boost export prices, Vichai said. "The upcoming elections in February (adds) another dimension to the (market) because the government wants to make farmers happy by boosting domestic prices," Vichai said.

The Thai government's price intervention program further limits export supply available to private traders, said Kedar Bedekar, head of rice trading for Noble Grain Pte. Ltd. in Singapore.

Bracing itself for an expected rise in prices, the Philippines, a major importer in Asia, will undertake its rice import program earlier than usual, said Gregorio Tan, administrator of the National Food Authority, a state-owned grains trading company.

Based on figures cited by the Food and Agriculture Organization, or FAO, and the U.S. Department of Agriculture, global rice stocks at the end of 2004 will be lower by around 50% from stocks four years ago at the end of 2000, Tan said.

"This reduced inventory could fall further due to possible disruption in production caused by El Nino. That's why we believe prices will be firm," he said.

Traders also expect increased shipping costs to boost grains prices, including that of rice. For instance, freight cost from Bangkok to Lagos in Nigeria has tripled to $90/ton from $30/ton early this year, Vichai said.

According to Ciss, the only bearish influence on the rice market will likely come from the U.S., which is expecting a 1 million ton-increase in its production to a record 10.1 million tons. With higher global prices in 2005, U.S. exports, which weren't competitive in many destinations compared to cheaper rice from Asia, should be able to catch up.
MGR Archive 19.12.2004
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Region Type Price  
Russia Rapan $ 700
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USA Calrose #1 $830
USA Calrose #1 Paddy $480
EU Prices Baldo €660
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