World Grain - February 2011 - 22

GRAINMARKETREVIEW

Rice
Soybean prices move to 34-year high amid supply concerns, China demand
by Chris Lyddon
Despite a likely rise in output and a predicted increase in ending stocks, rice prices remain ﬁrm, bolstered by tight supplies and the strength of wider commodity markets. In its report of Jan. 20, the International Grains Council (IGC) forecast total world rice production for 2010-11 at 452 million tonnes, up from a forecast of 449 million tonnes published on Nov. 25. Its ﬁgure for the 2009-10 crop is 440 million tonnes. The increased crop reﬂected a raised ofﬁcial ﬁgure for China, the IGC said. It raised China’s 2010 rice crop to 139.2 million tonnes from its previous forecast of 135.7 million. China’s 2009 rice crop is put at 136.6 million tonnes. “While global consumption is increased from before, ending stocks are raised to an eight-year peak of 98.2 million tonnes,” it said. “At 30.6 million tonnes, the forecast of world trade in calendar 2011 is reduced slightly, mostly reﬂecting a smaller projection of shipments to the Philippines. However, the total will still be 2 percent higher than in the previous year.” It noted an increase in rice export prices, along with other grains, in the period leading up to the publication of the report. “But while Thai values in late-December climbed to a ten-month peak, they subsequently fell back as the main crop harvest advanced,” it said. The U.S. Department of Agriculture’s (USDA) Economic Research Service, in a Rice Outlook report dated Jan. 13, also noted recent declines. “Trading prices for Thailand’s high- and mediumquality grades of non-specialty rice have decreased from 3 to 6 percent from the ﬁrst week of December,” it said. “The release of government-held intervention stocks, as well as a weaker Thai baht, was behind the decline in quoted prices.” “The government has released 4 to 5 million tonnes (out of total intervention stocks of 5 to 6 million tonnes) since July 2010,” the USDA’s attaché noted in a report on the Thai rice market. “The remainder of the approximately 1 million tonnes will be kept as safety stocks for food security purposes.” Meanwhile, foreign buyers made few enquiries for Thai white rice as they expect bumper new-crop supplies of Vietnamese rice in the upcoming second-crop harvest due in a couple of months, it said. In its Rice Advocate publication, the U.S. Rice Producers Association took a positive view of prices. “With harvest in Vietnam just a few weeks away, Asian prices look comfortably ﬁrm – more so than in years past,” it said. The Economic Research Service noted a drop in prices elsewhere. “Vietnam’s price quotes have softened slightly in recent weeks as well,” it said. “Price quotes for U.S. long-grain milled rice have fallen slightly over the past month, with large domestic supplies reducing some of the effects of historically low milling rates.” For Indonesia, the IGC predicts a recovery in production to 38.5 million tonnes in 2010 after the 2009 drop to 37.5 million
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Rice price indices
All Indica High quality 2009 November December 2010 January February March April May June July August September October November 241 249 251 242 219 204 200 210 214 217 232 249 260 227 238 232 227 213 197 192 193 189 192 205 217 233 Low quality 207 234 237 218 205 185 181 187 191 197 227 235 243 295 283 289 283 235 221 221 250 261 263 266 296 304 227 224 232 231 232 230 221 214 214 216 224 250 265 Japonica Aromatic

Source: FAO The FAO Rice Price Index is based on 16 rice export quotations. “Quality” is defined by the percentage of broken kernels, with high (low) quality referring to rice with less (equal to or more) than 20% brokens. The Sub-Index for Aromatic Rice follows movements in prices of Basmati and Fragrant rice.

Global rice situation
(in 1,000 tonnes)

500,000 400,000 300,000 200,000 100,000 0 2000-01

Production

Consumption

Ending stocks

* Projected Source: U.S. Department of Agriculture

from 38.3 million the year before. But the USDA’s ofﬁce there has raised doubts. It estimated that Indonesian 2009-10 rice production declined to 36.4 million tonnes compared to the previous 2008-09 crop of 38.3 million tonnes of milled rice equivalent. “It was learned during a recent ﬁeld trip to West Java that most farmers in the area started the ﬁrst planting season of MY 2010-11 in mid-November 2010,” it said. “Some pest problems continue to occur.” Indonesia’s ﬁrst main harvest is expected to take place in late February to March 2011 and will contribute an estimated 55% to 60% of annual rice production. Chris Lyddon is World Grain’s European editor. He may be contacted at: chris.lyddon@ntlworld.com.
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World Grain - February 2011

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