The Hindu Business Line : World rice trade may shrink this year

WHILE world rice trade in 2004 is expected to shrink from the record levels of previous two years, 2005 may witness a firming up of the market because of emerging supply constraints.

The international rice market reversed the firm tendency witnessed since March 2003 and weakened during May-September this year. Soft prices are expected to continue in the short term, aided by large supplies from the main crop due for harvest over the coming months in many of the Asian origins and absence of Indonesia, a large importer.

Announcement by Thailand that procurement prices would be raised from November may impart some firmness, while exports from India are unlikely to materialise for several months.

Presenting the emerging scenario in the latest Rice Market Monitor, the Food and Agriculture Organisation (FAO) forecast international trade in 2004 at 26.5 million tonnes (milled rice), down 1.6 mt from the record 28.1 mt of 2002 and 2003. A major reason for the contraction in trade is the anticipated import of Indonesia being pegged at a maximum of 1 mt in view of the extension of import ban till the year-end.

With rice production in 2003 and 2004 scaled down, world rice stocks are expected to dip to 97 mt by the end of 2005 season because of lower inventories in China, India and Bangladesh. FAO has forecast world paddy production in 2004 at 608 mt, up from 584mt of 2003. China will contribute to much of the increase, while output in India and Bangladesh is expected to be lower.

For India, FAO has forecast paddy production of 127.5 mt for 2004-05, some 3 mt lower than last year. Prospects for Basmati price production are also subdued, the report pointed out adding that there was 20 per cent reduction in Haryana where planting was reported to have fallen by 49 per cent from last year, and also in Uttar Pradesh and Punjab where area contraction was said to be 25 per cent.

Regarding rice export from India, the report said parboiled and Basmati rice shipments would place total exports at 2.8 mt, 36 per cent lower than in 2003. India is unlikely to be in the export market in the next few months given the uncertainties relating to grant of subsides.