by Chris Lyddon
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The 2014-15 global rice harvest is the largest on record thanks to increased area, says the U.S. Department of Agriculture (USDA). Vietnamese rice prices moved higher in September, making that country’s production less competitive against the Thai alternative.

In its Grain Market Report at the end of August, the International Grains Council (IGC) noted a marginal net gain in its IGC-GOI rice sub-Index.

“With values in Vietnam and India steady to moderately weaker, the firmer tone reflected higher prices in Thailand, owing to thin export availabilities and ideas of stronger near-term international demand,” it said. “Export quotations for broken rice in Vietnam eased modestly month-over-month as initial gains, tied to worries about tight supplies and ongoing shipments to key Asian buyers, was outweighed by pressure from the reported closure of China’s border in efforts to prevent unofficial trade.

“However, losses were capped by expectations of fresh export interest from Asian importers, including the Philippines. While values in India were firm, in part supported by demand for parboiled rice from African buyers, export values for white and parboiled grades in Thailand moved significantly higher, the 25% broken grade trading at a one-year high of $415 fob, mainly linked to thin old crop exportable supplies.”

According to the USDA Economic Research Service’s (ERS) most recent Rice Outlook report, global rice production for 2014-15 is forecast at 477 million tonnes on a milled basis, down 400,000 tonnes from the previous month’s forecast but still up 900,000 tonnes from 2013-14 and the largest crop on record. “The record global crop in 2014-15 is the result of expanded area,” the report said. “At a record 161 million hectares, global rice area in 2014-15 is up fractionally from a year earlier. Cambodia, China, Indonesia, the Philippines, and the United States account for most of the projected area increase.”

ERS forecast the average yield at 4.42 tonnes a hectare, almost unchanged from 2013-14, but down on the 2012-13 record of 4.45 tonnes. “The largest downward production revision this month was for the United States,” it said. “The U.S. 2014-15 crop forecast was lowered 5% to 6.98 million tonnes based on smaller area and weaker yield reported by USDA/NASS.”

Production forecasts were lowered for both North and South Korea due to adverse weather, the report continued. “The only other downward revision for 2014-15 was a 19,000-tonne decrease in the European Union production forecast to 1.95 million tonnes due to a slightly small crop in Spain,” it said.

There were three upward revisions. “First, Australia’s 2014-15 crop forecast was raised 144,000 tonnes to 648,000 tonnes based on a 20,000-hectare increase in area to 90,000 hectares reported by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) on Sept. 9,” the ERS said. “The area is up 18% from a year earlier largely due to favorable expected returns to rice production and adequate irrigation water.

“Guyana’s 2014-15 crop forecast was raised 34,000 tonnes to 570,000 tonnes based on government of Guyana data indicating higher area and yield. Both production and area are record high. Guyana has sharply increased rice production in recent years.”

Cuba’s 2014-15 crop forecast was raised by 10,000 tonnes to 440,000 tonnes based on a higher yield.

The ERS reported that prices for all grades of Thailand’s regular-milled white rice had moved in a narrow range over the past month, despite a rapid pace of sales and upward revision in the country’s 2014 export forecast. “On the price-bullish side, Thailand’s government-held supplies of rice remain extremely large, as sales of these stocks to exporters have been smaller and slower than expected, which has temporarily tightened the available supply situation,” it said. “On the price-bearish side, supplies from the final 2013-14 dry-season crop are available for export and the harvest of the 2014-15 main crop should begin in a couple of months.”

Price quotes from Vietnam had increased over the past month, helping to make Thailand a competitive seller. “Thailand’s prices typically exceed prices for similar grades of rice from Vietnam by around $50 per tonne,” the report said. U.S. prices for long-grain milled rice had declined over the past month.

The news agency Reuters reported recently that Thailand has so far lost 320 billion baht ($9.9 billion) from a 16-month rice support scheme, citing the state bank that helped manage the scheme, which also said that the final loss will rise substantially.

“The estimated loss was as at end-May,” Bank of Agriculture and Agricultural Cooperatives (BAAC) President Luck Wajananawat told Reuters, the report said.

The figure would rise as the rice had been bought by the former government at well above market prices, but was now being sold for much less as it was deteriorating in quality, the report said.

“The total losses will be estimated later since we need to compare the price the government paid when it bought rice from farmers and the prices the government sells the rice at,” he said.

Chris Lyddon is World Grain’s European editor. He may be contacted at: chris.lyddon@ntlworld.com.