World rice prices are expected to remain under pressure through 2000 amid growing supply levels and prospects for a second consecutive year of decline in global trade.
Prices for Thai 100% grade B, f.o.b. Bangkok, the benchmark export grade, fell to a low of U.S.$223 a tonne in October before recovering to U.S.$239 in December. The October price was down 27% from October 1998 and marked the lowest level since September 1993, when prices averaged U.S.$216 a tonne.
Price quotes for Vietnamese and U.S. rice also have dropped steadily. Vietnamese 5% brokens averaged U.S.$201 a tonne in October, down 32% from the same time a year earlier. By December, prices had recovered to U.S.$220 a tonne, but remained well below year-earlier levels of about U.S.$250.
In the case of Thai and Vietnamese rice, price recovery from the October lows was based on varying short-term factors. In Thailand, private sales to Indonesia, government intervention purchases and a stronger baht combined to lift prices slightly, while severe flooding in central Vietnam and corresponding transportation problems supported that country's price levels.
Meanwhile, prices of U.S. long grain, 4% brokens, f.o.b. Houston, fell below U.S.$300 to U.S.$298 in December, a four-year low and down 23% from a year earlier. The U.S. Department of Agriculture recently forecast the 1999-00 average U.S. farm price at its lowest level since 1986-87.
The U.S. rice crop is expected to reach a record 9.6 million tonnes, rough basis, primarily because of an 8% increase in plantings and a 5% increase in yield. The plantings increase reflected the fact that in some regions, rice remained financially attractive, despite falling prices, compared with competing crops such as soybeans and wheat, whose prices are under even greater relative pressure than rice.
Worldwide, 1999-00 price prospects for rice remain bearish. Global rice production and consumption both are expected to increase from the previous season to record levels, but the production increase is expected to outpace consumption gains, resulting in a growing surplus.
Ending stocks for 1999-00 are forecast to climb to nearly 60 million tonnes, milled basis, which would represent the highest surplus since 1990-91. China and India, the world's two largest rice producers and consumers, should see stocks increase by about 1% and 9%, respectively.
World rice trade in 1999-00 is forecast to slide by about 5%, the second straight season of decline following the record 1998-99 trade year. Projections of big declines in imports among the top traditional customers account for the expected drop.
Indonesia, typically the world's largest importer, is expected to cut 1999-00 purchases by about 23% from the previous season. That country's production is forecast to be about equal to 1998-99 output, while consumption should remain steady.
Philippine rice imports are projected to slide by about 25% from 1998-99, with the harvest forecast at a record level based on higher yields. Key importer Bangladesh also should reap a record crop, which is expected to slash import needs by as much as 36%.
Meanwhile, competition among exporters should remain keen. Thailand's shipments are expected to drop by about 300,000 tonnes, although the country should retain its title as the number one exporter with 5.8 million tonnes shipped. Vietnam's exports in 1998-99 reached a record 4.5 million tonnes, a figure that is expected to decline to about 4.1 million in the current season.
China and Pakistan each should increase exports slightly, primarily because of more than adequate availability of stocks. China's exports are forecast at 2.85 million tonnes, second only to the 3.7 million shipped in 1998-99, while Pakistan's shipments could reach a record 2 million tonnes. The U.S. also is projected to see a 9% increase in shipments, to 3 million tonnes.