Prospects for increased world supplies in 2009 and slowing demand have weighed on rice prices in recent months, along with external market developments that influenced most commodity prices throughout 2008.

From their highs in May 2008, prices for key rice export grades as of late December had plunged by as much as 62%. A stronger U.S. dollar, crises in credit and financial markets, equity market declines and the emergence of global recession indicators all fueled a collapse in the prices for many commodities, and rice was not immune.

But rice fundamentals also have provided some pressure. Global rice production for 2008-09 is projected at a record 434.6 million tonnes, milled basis, according to the latest report from the U.S. Department of Agriculture (USDA). The figure was slightly higher than the USDA’s previous forecast and almost 3.5 million tonnes higher than estimated 2007-08 production.

The USDA attributed the year-on-year rise in output to expanded global planted area, estimated at a record 155.6 million hectares. The average estimated yield of 4.2 tonnes per hectare was unchanged from last year.

Meanwhile, global disappearance in 2008-09 is projected at a record 432.3 million tonnes, up 1% from 2007-08. But because production will outpace gains in consumption, global ending stocks for 2008-09 should stand at about 80.8 million tonnes, up 3% from the comparable 2007-08 level.

If that gain in supplies is realized, 2008-09 supply/demand developments would mark the second consecutive year of a buildup in global rice ending stocks. That would put the global stocks-to-use ratio at the end of 2008-09 at 18.8%, up from 18.5% in 2007-08 and the highest since 2003-04.

In 2008-09, most rice exporters are projected to harvest larger crops, with record production projected for three of the top six exporters — Thailand, India and Pakistan. Of the remaining top exporters, Chinese and U.S. crops should increase, with a decline only in Vietnam, forecast to harvest at 23.5 million tonnes in 2008-09 versus 24.375 million a year earlier.

Most major importers also are projected to harvest larger crops in 2008-09, with production in Sub-Saharan Africa, the Philippines, Bangladesh, Indonesia and Malaysia projected to be the largest on record. Iran and Iraq are exceptions among the major importers, with a big decline in production expected in both countries.

Global rice trade for calendar year 2009 remains projected at 29.5 million tonnes, milled basis, up 1% from this year, but nearly 8% below the 2007 record. The Philippines should hold its rank as the top importer in 2009, with purchases projected at 2.5 million tonnes, equal to 2008 levels. Nigeria also should retain its No. 2 position, with imports of 1.7 million tonnes versus 1.6 million in 2008.

Iran is expected to buy 1.4 million tonnes in 2009, making it the third largest importer. Iran’s supplies are likely to tighten sharply because of a severe regional drought hampering domestic production, a situation also true in Iraq, which is forecast to raise its 2009 imports by 25,000 tonnes to 1 million.

Venezuela’s imports should increase to a record 245,000 tonnes, based on a surge in purchases late in 2008 that will likely be shipped in 2009. Consumption growth has been quite strong in Venezuela in recent years, the USDA said.

Among exporters, the biggest change is forecast for Pakistan. By virtue of its expected record crop of 6.3 million tonnes, Pakistan should be positioned to export a record 4 million tonnes, to rank third behind Thailand and Vietnam.

Actual world trade will depend on prices, which, at their peak in 2008, led to food riots, export restrictions and other distresses. By late December prices had stabilized at lower levels, but quotations remain near historic highs, with a smaller cushion against upward moves causing renewed disruptions.