Despite climatic shifts and natural disasters plaguing some rice producing countries, the 2013 season has produced more rice than expected, adding to the ninth straight year of rice surplus or 'carry over,' the UN's Food and Agriculture Organisation (FAO)
And in terms of exports, Thailand is expected to capture much of the expected expansion in world demand and remain the world’s No.2 exporter after India in 2014.
As farmers in many countries begin the last harvests of the 2013 season, several countries have raised their 2013 production estimates above those reported in November. They included China, India, Pakistan and the Philippines, which had endured a number of climatic setbacks, but where damage to crops was said to have been less severe than previously thought, according to the FAO’s first Rice Market Monitor (RMM) report for 2014.
Prospects also improved for Colombia, Indonesia, Iran, Japan, Nepal, Sri Lanka and Tanzania, while they deteriorated for Cambodia, Laos, Myanmar and Russia, according to the report.
"Overall, the revisions translated into a 3.5-million tonne upgrade of 2013 global paddy rice production to 744.9 million tonnes (496.6 million tonnes, milled basis), which makes for a 1.1 per cent increase from the previous season, and renewed again an historic world record harvest," said Hiroyuki Konuma, FAO assistant director-general and regional representative for Asia and the Pacific.
While the damage caused by floods, storms and other erratic weather in Asia and the Pacific took a toll in 2013, the report warns that, going forward, "climatic events affecting the development of 2014 season crops, such as the potential El Nino event, are also likely to influence market sentiment."
FAO’s first global production forecast for 2014 predicts a third consecutive season of subdued growth. "Global paddy production in 2014 could reach 751 million tonnes (500.7 million tonnes, milled basis), 0.8 per cent more than currently estimated for 2013," the RMM reports.
Based on the latest estimates, global rice stocks carried over into 2014 are set to rise for the ninth consecutive year, reaching 180.5 million tonnes (milled basis), 1.5 million tonnes more than foreseen in November, and 3.2 per cent above their opening level in 2013. Developing countries would be responsible for the entire increase in stockpile.
Combined, the five major rice exporters (India, Pakistan, Thailand, the United States and Vietnam) remain projected to end their individual 2013/14 marketing years with 3 per cent more on reserve, or 48.4 million tonnes.
Accelerated release of Thai rice
Much of this rice stock growth would reflect larger holdings in Thailand supported by an overall good harvest and official procurement under the main-crop round of the 2013/14 paddy-pledging programme. Nevertheless, reserves in the country are forecast to end down 1.1 million tonnes in 2014, lower than previously envisaged, at 19.3 million tonnes, consistent with the country’s improved outlook for exports in 2014, following the accelerated pace of government stock releases since the latter half of 2013 and the suspension of the secondary crop round of the scheme.
Overall, three of the five major rice exporting countries (Pakistan, Thailand and Vietnam) are expected to continue to build up their reserves, but that will be compensated globally by a drawdown in the other two major exporters, India and the United States. As a result of these changes, the world stock-to-use ratio, a key indicator of food security, is predicted to rise from 35.7 per cent in 2012-13 to 35.9 per cent in 2013-14. In light of the higher expected availabilities and sustained declines in Thai export quotations, FAO anticipates Thailand to raise its level of exports to 8.7 million tonnes, 200,000 tonnes more than last projected and 2 million tonnes above the 2013 poor performance.
"Given expectations of an overall ample supply in major exporting countries, these harvests could exert additional pressure on export quotations. Against this backdrop, buying decisions will play an important role. The government of the Philippines has already announced plans to conduct an import tender in April," the report notes.
The return of other important buyers could mitigate the downward pressure on prices. According to FAO’s price sub-index, the price of high quality Indica rice declined by 2.4 per cent in March.
Among major rice importing countries, China is expected to renew its status as the world’s No 1 rice importer with imports expected to increase to 3.3 million tonnes in 2014, while the Philippines and Indonesia are expected to increase their imports of rice by around 60 to 70 per cent in 2014 to 1.2 million tonnes and 1.1 million tonnes, respectively. Malaysia’s rice import is projected to remain at the level of 1.1 million tonnes this year.
"On the policy front, decisions in Thailand concerning government support to the rice sector will hold particular sway, as will the pace with which officials continue the disposal of public stocks," the report adds.
Since its last report in November, the RMM has lifted its estimate for global rice utilisation in 2013-2014 by one million tonnes to more than 490 million tonnes (on a milled basis), an increase of 2.5 per cent on the previous year. That figure could rise to 502 million tonnes in 2014-2015. While human consumption accounts for most of the increase (83 per cent), other uses, such as animal feed are also expected to increase.
While surpluses continue to grow even with modest production increases, international trade in rice is forecast to make a recovery in 2014.
"FAO is predicting that 2014 will experience a 5 per cent jump in international trade of rice," said Konuma. "That is an increase of more than one-million tonnes on the 38 million tonnes foreseen just four months ago – a new high."
On the supply side, ample availabilities in exporting countries, following large harvests and inventories, are intensifying competition for markets. Amid sustained efforts to curb its public inventories, Thailand is expected to capture much of the expansion in world demand.
"Larger deliveries by these countries would come at the expense of reduced exports by India, which may, nonetheless, retain its number one position among exporters." According to the report, India is expected to retain its No 1 rice exporter position in 2014 with estimated rice export of 9.5 million tonnes in 2014, followed by Thailand (8.7million tonnes) and Vietnam (7.2 million tonnes).