With world rice consumption projected to outpace production for the seventh consecutive season in 2007-08, global rice ending stocks are likely to fall to their lowest levels in more than 20 years, according to a recent report by the U.S. Department of Agriculture (USDA). Consequently, the stocks-to-use ratio is forecast to drop to its lowest reading in more than three decades.

The USDA projects 2007-08 world rice production at a record 420.9 million tonnes, milled basis, an increase of 1% from 416.6 million the previous marketing year. Global consumption in 2007-08 is estimated at a record 424.5 million tonnes, slightly more than 1% higher than the 418.4 million consumed a year earlier.

With 2007-08 disappearance exceeding production by 3.6 million tonnes, global ending stocks for 2007-08 are projected to decline by 5% to 71.8 million tonnes, the smallest since 1983-84. The forecast 2007-08 stocks-to-use ratio of 16.9% would be down from 18% at the end of the 2006-07 season and would be the lowest since 1976-77.

Among major producers, slightly larger crops in 2007-08 are forecast in China, Indonesia, India, Pakistan and Thailand. Those increases are projected to more than offset small production declines in the United States, South Korea, Taiwan and Turkey.

Domestic use should continue its steady pace of increase in all major consuming countries except in Japan and South Korea. In those two nations, 2007-08 use is forecast to slip by 1.2% and 1.6%, respectively, from the previous season.

The USDA estimated world rice trade in calendar 2007 at a record 29.7 million tonnes, up from 28.9 million in calendar 2006. A nearly four-fold jump in imports by Indonesia should underpin that increase.

A prolonged dry season in late 2006 delayed plantings and undermined the Indonesian government’s efforts to boost production by providing free seed to farmers. The planting delays are expected to cut 2006-07 Indonesian rice production by 5% from the previous season, leading to estimated calendar 2007 imports of 2 million tonnes versus 539,000 in 2006.

Among the five leading exporters, Thailand is well placed to meet record world import demand because it holds large levels of intervention stocks from its 2005-06 crop. Thailand should export 8.8 million tonnes of rice in calendar 2007, up from 7.4 million in 2006, and the USDA expects Thai rice shipments to reach 9 million tonnes in 2008.

Vietnam is expected to export 5 million tonnes in 2007, second highest behind the record 5.2 million shipped in 2005. Even though the government lowered its 2007 export target to 4.5 million to 4.7 million tonnes because of steady year-on-year crop production, actual exports should exceed the target because of relatively high world prices.

In Pakistan, another of the big five exporters, exports in 2007 should stand at 3.1 million tonnes, down sharply from the record 3.66 million exported in 2006, but still the second highest on record. Much of the strength in Pakistan’s 2007 export demand stems from a buying spree by Iran to stockpile grains in anticipation of economic sanctions for its nuclear program.

As a result of the booming exports over the past two years, Pakistan’s retail rice prices in early- to mid-2007 were 60% higher than the same time in 2006. Analysts think the government is not likely to ban rice exports, as it did for wheat, because rice is not considered a strategic food.

They also think recent reports of possible rice imports, which would be the first in Pakistan’s 60-year history, mark an effort to "talk down the market." Nonetheless, both the government and the trade will continue to monitor the situation closely, they say.