The FAO recently released its initial report, saying that global paddy production in 2006 could rise to 634 million tonnes, six million or 1-per-cent more than in 2005.

Asia still maintains its priority as producer and exporter. Paddy production in the region is forecast at 573 million tonnes in 2006, seven million tonnes more than in 2005.

The increase reflects expectations of growth in Bangladesh, China, India and Vietnam, while output may decline in Cambodia, Japan, South Korea and Sri Lanka, driven either by ongoing policies to reduce production surpluses or, for those countries that benefited from particularly favourable conditions last season, by expectations of lower yields.

Paddy output in Africa is anticipated to rise by 2.4 per cent to 21.3 million tonnes in 2006, with much of the gain attributed to Nigeria where policies support an expansion of the sector. By contrast, prospects for the season are negative in Latin America and the Caribbean, where output may drop by two million tonnes to 24.5 million tonnes. The contraction is foreseen to be concentrated in Brazil, Ecuador, Peru, Uruguay and Venezuela.

In the rest of the world, production may increase somewhat in the EU, although the impact of the full implementation this season of the partial disconnection of payments to producers from actual rice cultivation is uncertain. The production outlook is positive for the United States and, especially, for Australia, where the end of a drought has enabled producers to double the area under rice cultivation.

The report also said the global rice economy had a record-breaking last year with a total of 628 million tonnes. The brisk expansion derived from high prices in 2004 as well as high import demand to reach a record export volume of 29 million tons last year.

FAO's forecast of trade in 2006 has been lifted to 27.8 million tonnes, but it remains 4.1-per-cent lower than in 2005.

Global rice exports are forecast to decline this year, reflecting smaller expected shipments from India, Pakistan, South Korea, Egypt, the US and Uruguay.

By contrast, exports from Australia, China, Thailand and Uruguay may rebound, while little change is foreseen for Vietnam. Thailand's Commerce Ministry has forecast that its total rice export volume will reach 7.5 million-8 million tonnes, ranking Thailand as the world's largest rice exporter.

Global rice carry-over stocks at the close of the 2005/06 crop years are now estimated to remain very close to their opening level of 99 million tonnes, which might signal that the adjustment process initiated in 2000/01 has reached an end.

World prices may weaken in the coming months, when new crop supplies become available in leading exporting countries such as India, Vietnam and Thailand, but also in several key importing countries. Policies conducted by the major exporting countries, in particular China, India, Thailand and Vietnam may, however, thwart the tendency for prices to fall.