Estimated 2009-10 global production of rice is down 3 percent from last year, which would be the first global decline in five years, according to Nathan Childs, senior rice market analyst with USDA’s Economic Research Service.
Childs, speaking at the USA Rice Outlook Conference in New Orleans, said the decline is mostly due to area contraction in India, the Philippines and Brazil. “Global supplies are down too, also the first decline in five years.”
World trade, meanwhile is expected to increase by 6 percent in 2009-10. Some countries expected to expand exports include China, Vietnam, Thailand and Pakistan. Despite a shortfall in production, India is expected to increase exports, based on expectations of larger shipments of basmati rice. Imports are expected to rise in Philippines, Brazil, Iraq and Bangladesh.
Trade had dropped by 4 percent the previous year due to record prices and export restrictions. Big exporters last year were Thailand, China and Pakistan, while Southeast Asia was a big importer. Sub-Saharan Africa reduced its imports last year “because it’s seeking self sufficiency. The 2007-08 rice price runup encouraged them to try and grow more rice.”
Childs projects 2009-10 global rice consumption to be the highest on record, which will help contribute to lower global ending stocks. “World ending stocks are expected to drop by 2 percent, but it doesn’t really tighten the stocks-to-use ratio very much.
Uncertainties include the timing and level of Philippine import tenders, the release of Thailand’s so-called intervention stocks and how much rice India will import, according to Childs. “Will it be 200,000 tons or 2 million tons? Currently, we have India importing a very modest 200,000 tons in 2010. If India’s imports are substantially more than that, it would have a huge impact on prices.”
Currently, Thailand’s rice prices exceed U.S. prices, noted Childs. “U.S. long grain prices had been trending down off the 2007-08 spike, but they’re starting to pick back up again on weather problems globally, uncertainty over India’s import situation and Thailand holding 4 million to 5 million tons of rice off the market.”
For the week ending Dec. 8, price quotes for high-quality southern long-grain rice (No. 2, 4-percent brokens, bagged, free alongside vessel, U.S. Gulf port) were quoted at $562 per ton, up $33 from the week ending Nov. 10.
These are the highest U.S. prices since early February, Childs said. “The recent strong price increase is largely due to rising global trading prices resulting from several large purchases by the Philippines and a weaker dollar.” U.S. prices are currently $34 per ton below Thailand’s quotes, Childs said.
Prices for California package-quality, medium-grain rice (sacked) for domestic sales were quoted at $816 per ton for the week ending Dec. 8, which is unchanged since early November.
California milled rice export prices have dropped about 20 percent since August, noted Childs. A large California harvest, expanded medium-grain area in the South, and an expected big increase in carryout are behind the decline in U.S. medium-short-grain prices.
For 2011, Childs sees global rice area coming back, large global production, record total use, lower trading prices with return to normal production, increasing global trade and a larger carryout.
The first official USDA projections for 2011 will be released in May.