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Thursday, Jun 10, 2004

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Global rice prices seen rising on declining stocks

G. Chandrashekhar

San Francisco , June 9

THE global rice market is in for remarkable changes in 2005 with prices expected to soar on the back of major changes anticipated in production, consumption and stock position.

Rice production across the world is forecast to continue to trail for the fourth year in a row, resulting in a further drawdown of stocks leading to a 20-year low level of inventory. Global trade in 2005 is, however, unlikely to show any notable change from the current year.

Changes in demand, supply and stocks will obviously have an implication for market prices which are expected to strengthen. China's role is expected to be crucial as it would become a net importer of rice for the second successive year despite production seen returning to normal level.

World rice production in 2004-05 would be 401.8 million tonnes, up from 390.2 mt in the current year, assuming normal weather in major rice growing countries, especially in Asia. Recent firming up of the market is seen driving acreage for paddy up.

Consumption, on the other hand, would be 417.9 mt (412.5 mt), the US Department of Agriculture (USDA) has forecast. World rice use has been expanding at 4-5 mt each year. The ending stocks are expected to plunge to 69.4 mt (85.1 mt), the lowest level since 1983-84.

Global rice trade is seen rising marginally to 25.5 mt from 25.1 mt in the current year. Increased demand from Indonesia and China may be partially offset by reduced demand from the Philippines.

As export supplies get tighter, importers are likely to pay higher prices. Traditional exporters Thailand and Vietnam would be the major beneficiaries of the anticipated changes in market conditions. In case of China, while exports from the origin would continue, the country is likely to import some quantity of rice in 2005 like it has done this year, USDA said.

Whether or not India would take advantage of the emerging situation and export rice in notable quantities next year would depend on the level of production and policies of the Government relating to export sales. If India decides to enter the export market, both supply tightness and prices may ease somewhat.

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