Recent months have seen rice markets coming under pressure as crops advance, but there have been some bullish signals.
Prices for white rice in Thailand saw two-year lows in March, according to the International Grains Council (IGC), but the United Nations Food and Agriculture Organization (FAO) has warned about dryness in the Mekong delta that could hit production in Thailand and Vietnam, potentially cutting shipments from two of the world’s big rice exporters.
The IGC also noted that weakness in Asian markets had fed through into the U.S., with milled rice prices at the Gulf, high-quality No. 2 falling to a five-month low.
In Thailand, low prices and a failure to sell any old crop state reserves at auctions leading up to the preparation of the IGC’s Grain Market Report for March led the deputy prime minister to announced that there would be no further attempts to release stocks in the first half of this year, in a bid to stem further declines in price.
Instead, according to the IGC, the government planned further intervention purchases from farmers, despite high state-held stocks, already estimated at more than 7 million tonnes on a milled basis.
"While this provided mild support, it was outweighed by pressure from increased availabilities as harvesting in the region progressed," the IGC noted.
Vietnam’s expected bumper spring crop weighed on export values, although reports that the Philippines could return to the market in May, following presidential elections, as well as an expanded Vietnam’s government stockpiling program, limited falls.
More recently, however, the Reuters news agency quoted an official in the Philippines as saying that the country may have completed rice imports for 2010, given healthy stockpiles and a relatively moderate impact of dry weather on crops. Reuters said that the Philippines has ordered a record 2.45 million tonnes of rice imports for this year. "NFA has no more plans to import for 2010," Rex Estoperez, spokesman for state grain agency the National Food Authority (NFA), told Reuters. "We might import, but that would already be in preparation for 2011. NFA has enough stocks in its warehouses."
IGC put Vietnamese state inventories at 26.9 million tonnes as of March 1, more than double a government target of 11.8 million tonnes, following larger-than-expected purchases from farmers. 2009-10 procurements reached 24.7 million tonnes by March 21, the IGC said. The news agency Bloomberg reported on April 7 a warning by FAO experts that drier-than-normal weather that’s cut water levels in the Mekong River could cut production. It quoted senior FAO economist Concepcion Calpe as saying the Thai harvest that began in April, which accounts for 25% of annual output, could be cut to 7 million tonnes from 8.4 million last year.
"For the time being, Thailand is the only country that shows a decline in rice production," said Calpe, adding that "the decline will not have a dramatic impact on international trade as Thailand has lots of stocks."
The US Rice Producers Association expressed the view that producers across the globe were getting what U.S. growers had become used to. "Asia is still very quiet and seeing price quotes slip a little more, but thankfully at a much slower rate," it said. "At some point sellers in the Far East will recognize that their price drops are not getting the attention of potential buyers who will only return when they have solid demand and/or see prices bottoming and starting to rise.
"The same hand-to-mouth buying we have seen in the U.S. over the last couple of years is being seen internationally now."
Chris Lyddon is World Grain’s European editor. He may be contacted at: