A sharp fall in output in India is likely to mean a drop in world rice production in 2009-10, according to the latest estimates from the International Grains Council (IGC).

The IGC put world milled rice production at 433.8 million tonnes in 2009-10, down from 445 million in 2008-09. The main reason for the fall is a reduction in India’s production, down 14.8% to 84.5 million tonnes, a five-year low.

"Late and uneven monsoon rains resulted in a greatly reduced main crop (Kharif) area and, with average yields expected to be lower, the summer-sown crop was officially placed at 69.5 million tonnes, down 18% from last year," the IGC said. It did expect farmers to make up some ground with increased plantings of the smaller winter-sown (Rabi) crop.

U.S. Department of Agriculture (USDA) officials in India, reporting in December, reckoned there were limits to what could be done with an increased Rabi crop. "The GOI’s (Government of India’s) ambitious target of increasing Rabi rice area by 1.2 to 1.5 million hectares over the 2008-09 record level of 5.8 million hectares, to achieve an additional production of 3.5 to 4 million tonnes, appears very difficult due to various agro-climatic and irrigation constraints," the report said. It agreed with the IGC’s estimates.

Production in other countries is helping to mitigate the effect of India’s problems. China’s official production forecast is a record 137.1 million tonnes, compared with 134.3 million in 2008-09, due to an increase in paddy area, the IGC said. The U.S. crop was 500,000 tonnes higher at 7 million. Thailand’s improved main crop meant a forecast of 19.7 million tonnes, up from19.4 million in 2008-09.

Trade is also likely to be down, with the IGC predicting a fiveyear low of 28.2 million tonnes for 2009. However, shipments to Asian markets, especially the Philippines, are likely to mean a recovery to 9.6 million in 2010.

Typhoon damage in rice-growing areas of the Philippines led to concern about the crop, and the IGC noted that the government had bought 250,000 tonnes from Vietnam. The country’s National Food Authority ran a further series of tenders through December. "The tenders indicate that imports will rise significantly in 2010," said the IGC.

The Philippines’ large purchases and the weakness of the U.S. dollar triggered a sharp rise in prices at the end of 2009. For example, according to an analysis prepared by the USDA’s Economic Research Service, Thailand’s high-quality, 100-percent Grade B (fob vessel, Bangkok) milled rice for export was quoted at $611 per tonne for the week ending Dec. 8, up 12% in a month.

The USDA’s experts in New Delhi were not convinced that India would be importing more. They pointed out that the government will have 42 million tonnes of rice in its Public Distribution System in 2009-10, compared with a normal requirement of around 25 million.

"Even if the government distributes 4 to 5 million tonnes more rice through the PDS or through open market sale programs in order to contain price increases, ending government stocks for (marketing year) 2009-10 would still be around 12 million tonnes, well above the desired October 1 minimum buffer stock level of 5.2 million tonnes," they said. "Accordingly, there will likely be no need for large-scale government rice imports in marketing year 2009-10 unless government procurement falls significantly below the projected level, or there is another poor monsoon again next year."

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