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VietNamNet Bridge – While the Vietnam Food Association (VFA) believes that rice prices will continue rising towards the end of 2009, economic analysts say that the price increase may not happen.
According to VFA, by the end of September 2009, Vietnam exported nearly 5 million tonnes of rice, reaping a record $2.018 billion. VFA Chairman Truong Thanh Phong stated that Vietnam’s rice is going for a good price, forecasting that the price would move up further in the latter months of 2009.
Nevertheless, signs in the world market do not show such bright prospects, according to Saigon Tiep Thi.
Economists believe that it is very likely that Thailand, the world’s biggest rice exporter, will push up rice exports from now through the end of the year. Such a move would make the global rice price plummet.
Thailand’s rice exports thus far for 2009 are reportedly lower by 200,000 tonnes per month. To fulfill their rice export target, the country will have to flood the world market with nearly 210,000 tonnes of rice per week, an increase of 21.7 percent over the same period of 2008.
The chairman of the Thai Rice Exporters’ Association has stated that the rice export volume of the country would be not just 8.5 million tonnes, but would reach 8.7 or even 9 million tonnes.
The Government of Thailand has also applied a new policy on rice export management. The Government will not be the main buyer of rice on the Thai market anymore. In other words, instead of regulating and limiting rice exports, the Government of Thailand now wants to boost exports.
Because of these two factors, the Chairman of the Thai Rice Exporter’s Association has predicted that, with good weather, Thai rice prices may drop to $380-400 per tonne by the end of the year due to the increasing supply.
Moreover, other rice exporters who have been encouraged by the prolonged rice fever, have been pushing up rice production, which has led to the increased rice export volume.
Myanmar, for example, increased their rice export volume from 31,000tonnes in 2007 to 541,000 tonnes in 2008 and is targeting one million tonnes for 2009.
Similarly, Cambodia, which exported 500,000 tonnes in 2008, is planning to export 800,000 tonnes this year.
Additionally, while the supply increases, demand remains unchanged, leading to the prediction that rice stocks on the world market will increase by 10.3 million tonnes to 90.7 milion tonnes, a record high for the last six years.
The Philippines, a big rice importer in the last several years, has been stricken continuously by typhoons and is expected to reduce its rice imports by 400,000 tonnes from the previously projected 2.4 million tonnes.
India imports rice increasing price rapidly
By Manolo Serapio Jr. and Naveen Thukral
MACTAN, Philippines/Singapore (Reuters) - A steep decline in India's rice output has raised expectations the nation will turn into a net importer, but ample domestic stocks will help keep imports minimal, preventing a sharp rally in prices.
Analysts said India might look for cargoes after New Delhi scrapped import duty, but the move is unlikely to drive Thailand's benchmark 100 percent B grade rice anywhere close to last year's record of $1,080 a tonne -- thanks to adequate world supplies and good crop conditions in most producing countries.
"I will be very surprised if they were to buy significant quantities of rice as we have seen in the past. When rice output falls, they tend to reduce consumption and drawdown stocks," said Darren Cooper, a senior economist with the International Grains Council in London.
The talk of rice imports by India, at a time when the typhoon-stricken Philippines is in the market earlier than usual, boosted U.S. rice futures to a 10-month high on Thursday.
India lifted a 70 percent duty on rice imports this week as drought has fed fears its output of the staple would fall around 17 percent, firing market speculation the country will need to import up to 3 million tonnes to bridge the supply gap.
"There is no question that between the Philippines, India and probably Indonesia, there will be heavy demand for rice," Bob Papanos, a director of Houston-based Seacor Commodity Trading LLC, told Reuters at a conference on the Philippine island of Cebu.
In India, where output is expected to drop to around 80 million to 82 million tonnes from last year's record 99.2 million, the government's reserves stood at 14.5 million tonnes on October 1, against its usual provision of 5.2 million tonnes.
The nation of 1.2 billion people is likely to consume about 90 million tonnes in 2009/10, leaving a gap of about 8 to 10 million tonnes, most of which could be easily met by surplus stocks, analysts said.
For a graphic of Indian rice production and consumption, click:
here
PRICE GAP
Besides plentiful stocks, India's domestic rice prices are lower than those overseas, making it tougher for private players to profitably sell at home large volumes bought abroad, although that picture could change if the staple runs short.
Thai 100 percent B grade rice costs $550 a tonne at Indian ports and rice from Vietnam would be $460, both comparing unfavourably with India's domestic price of $275 a tonne.
Some traders added that Indian private traders were unlikely to jump in to seal deals immediately, or at least until the government issued clear guidelines on imports and distribution.
Two government sources told Reuters on Friday India's state trading firms were likely to import 30,000 tonnes of rice and the government was expected to finalise import guidelines soon.
If India imports rice, it will mainly go to build reserves and not meet immediate market needs. This was underscored by Trade Minister Anand Sharma on Thursday, when he said the country had sufficient stocks and would import only to bolster its buffer stocks.
"Whatever is required, we will do it, but we are assured of adequate availability of our stocks," Sharma told Reuters at a conference in Cairo. "If we need anything, it will only be to add to the buffers. We have enough rice, enough wheat, to feed our people."
In addition to expectations of Indian purchases, Manila kicked off its 2010 rice-buying programme two months earlier than usual, with a tender to buy 250,000 tonnes next week.
The prospect of India turning into a buyer, coupled with demand from the Philippines and other importers, could push the price of actively traded 5 percent broken grade rice to more than $600 a tonne, versus around $440-$490 now, Papanos said.
"The Philippines and India, definitely these are the two drivers of the market right now," said Samarendu Mohanty, a senior economist at the International Rice Research Institute, based in Manila.
Still, abundant world supplies and hopes of bumper crops overhang the market, said analysts, adding that Thailand, the world's top exporter, is sitting on a stockpile of some 8 million tonnes.
"China is going to bring in a record crop, the U.S. has a very very good crop this year," said IGC's Cooper. "There are ample supplies and crops are looking good."
For its part the Indian government is trying to ensure that the domestic market is well supplied. A government source in New Delhi said the decision to remove import duty intended to signal the government's resolve to rein in domestic prices.
The government has also announced that farmers will be paid a bonus of 50 rupees per 100 kg of rice bought by government agencies, which could spur higher procurement by the state-run food companies.
The government firms have bought 7.7 million tonnes of rice from farmers between October 1 and 29, up more than 2 percent from last year's 7.5 million tonnes, media reports say.
On top of that, India's food demand is highly price elastic, and many people simply switch to cheaper grains if the price of the staple rises.
In the crop year 2002/2003, for example, India's rice production slid by around 20 million tonnes to 72.7 million tonnes, but imports were negligible as the country dug into its buffer stocks and consumed more wheat.
VietNamNet/SGTT
Rogers Says Rice to Climb as FAO Sees Stockpile Drop
By Luzi Ann Javier
Oct. 9 (Bloomberg) -- Declining global rice stockpiles and lower production in India will push prices higher, said investor Jim Rogers, chairman of Rogers Holdings.
“The world is very vulnerable to production problems,” Rogers, who predicted the start of commodities rally in 1999, said in an interview. “We’re already seeing it in India. That’s going to mean higher prices somewhere along the line.”
Rice stockpiles of the world’s five largest exporters are forecast to plunge by a third to the lowest level in five years, and below last year when prices surged, Concepcion Calpe, senior economist at the United Nations Food and Agriculture Organization, said at a conference in Bali today.
Global rice prices soared to a record $25.07 per 100 pounds in April 2008 on declining inventories, sparking concern over a global food crisis. This prompted exporters including India and Vietnam to curb sales, cutting supplies for countries like the Philippines, the biggest importer. Prices almost halved since then as farmers boosted production, replenishing stockpiles.
The contract for November delivery jumped 1.9 percent to $13.48 per 100 pounds yesterday on the Chicago Board of Trade, the steepest gain since Aug. 31, and was little changed at $13.495 at 2:42 p.m. in Singapore.
Total stockpiles held by Thailand, Vietnam, the U.S., Pakistan and India will fall to about 20 million metric tons at the end of the marketing year on Sept. 30, from 30 million tons a year earlier, on lower-than-forecast crops and rising demand for imports, Calpe said today.
Drought, Flood
The weakest monsoon in India since 1972 may cut the nation’s rice production by about 18 percent in the marketing year that began Oct. 1, Calpe said in an interview Oct. 7.
Floods now affecting the south of India will also reduce production, Junior Food Minister K.V. Thomas said Oct. 6. The flooding will cut production by at least 3 million tons, the Hindu Business Line reported today, citing N. Raghuveera Reddy, state farm minister for Andhra Pradesh.
The last time stockpiles of the five largest exporters fell by a third was in 2002-2003, when India “had a bad monsoon, and prices then were low,” Calpe said. Rough rice futures on the Chicago Board of Trade reached a low of $3.52 in April 2002.
Tropical Storm Ketsana and Typhoon Parma destroyed at least 7 percent of the Philippines fourth-quarter crop in the past week and wiped out inventories in parts of the country. The Philippines may import 2 million tons of rice in 2010 to cover losses from the storms, National Food Authority Assistant Administrator Jose Cordero, said in an interview in Bali today.
Shelving Exports
Indonesia state food company Bulog said Oct. 6 the country may shelve plans for its biggest rice exports in at least 50 years if dry weather caused by El Nino causes production to miss a state forecast of 40 million tons.
Rice production in Pakistan, the world’s fourth-largest exporter, is forecast to drop 4.8 percent this year from a year ago, Safder Hussain Mekhri, a vice-chairman with the Rice Exporters Association of Pakistan, which accounts for about 95 percent of the nation’s shipments, said in an interview.
Output may drop to 6 million tons this year from 6.3 million tons last year, he said, while exports may be little changed at 3.1 million tons, Mekhri said.
“Supply is going to get tighter,” Rogers said in an interview late yesterday. “Production is going down for a variety of reasons. Many farmers cannot get loans,” limiting their ability to raise yield and expand acreage, he said.
El Nino
Higher reserves in China, the world’s largest grower and consumer, may help slow the decline in total global stockpiles to 3 percent to 117.4 million tons, Calpe said.
Still, “we’ve not considered the flooding in the Philippines and El Nino in Indonesia because we did the estimate on Sept. 25,” Calpe said. “Next year, if there’s a bad year, then things are going to be more serious because then we’d have to work from much lower stocks.”
The impact of El Nino, which can delay rains in Asia and cause flooding in South America, may also push global production lower next year, forcing affected countries to draw down inventories, she said.
“Indonesia is especially at risk and Australia of course,” Calpe said, referring to El Nino. The weather phenomenon may also lower yields in South America “because if it’s cloudy, they won’t get the proper sun and that’s very important for yields.”
Typhoon Damage
While the slump in Indian production will drag total volume down, not all of the major exporters will see output and stockpiles drop, Calpe said.
Rice production in Vietnam, the world’s second-largest exporter, may climb to a record of between 37.9 million tons and 38.3 million tons in 2010, Pham Van Du, deputy director general of Vietnam’s Crop Production Department, said yesterday.
Typhoon Ketsana destroyed at least 100,000 tons of the Vietnamese rice crop, Pham said in an interview in Bali today. The losses are unlikely to lower significantly the nation’s rice output, he said. Production is forecast to reach a record 37 million tons this year, the USDA said in a report this week.
“At the moment, there is no evidence of supply shortages in the market,” Calpe said Oct. 7, adding that last year’s record prices were “not really triggered by shortages, it was an overreaction by governments and the market.”
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Rice prices to shoot up on Philippine buy
16 Oct 2009, 0041 hrs IST, ET Bureau
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NEW DELHI: Global rice prices may shoot up by March-April 2010 on the back of heavy buys by the world’s largest rice importer, Philippines, even as
India gears up to possible imports during the same period. India does not import rice and has only exported for more than a decade now. India also ranks among the world’s top rice consumers. “We will only be able to assess the possibility and quantum of rice imports by March-April after projections of the rabi wheat output have been made for the 2009-10. The CoS early in September directed that the rice budget be reworked after production assessments become clear. We will be able to do that after mid-October when the advance estimates are scheduled,” a food ministry official said. As per assessments, in the aftermath of the recent floods in Karnataka and AP, a kharif rice output shortfall of 15 million tonnes cannot be ruled out. According to projections, there will be rice imports of 2-5 million tonnes in early 2010.
That has forced the government to tangentially revise its output target for winter rice from an average 12 million tonnes to 18 million tonnes. In addition, it is pushing for an early rabi sowing in order to boost wintersown food crop output to a record high. With that in mind, the government earlier this week ruled out any possibility of opening up wheat exports, banned since 2007, in the near future. It, however, also put off a related key decision on whether to ease plant quarantine restrictions on wheat imports as done in 2006 when imports were made to boost domestic supply and cool prices.
To defuse the pressure on wheat prices in the retail market, India plans to sell around 4.5 million tonnes of the commodity in the peak consumption period of October-December in the domestic market, through tenders to bulk consumers, on the basis of allocated quantity to states by Food Corporation of India.
In September, Philippines was hit by natural disasters that wiped out an estimated 4.5 lakh tonnes of rough rice. The slump engineered by Tropical Storm Ketsana and Typhoon Parma was “a significant loss,” according to commodity monitors.
Towards the end of last month, Philippines National Food Authority spokesman Rex Estoperez said the damage to rice crops from typhoons Ondoy and Pepeng would be felt by the country in the first half of 2010. A decision on the quantum of imports could be taken this week. Thailand and Vietnam, the two countries that benefited the most from India’s rice export ban, are already sizing up the gains.
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Climate change threatens many in Mekong region-WWF
By Chisa Fujioka
BANGKOK, Oct 5 (Reuters) - Changing weather patterns and rising seas are already affecting many people in Southeast Asia's Greater Mekong Basin and climate change threatens the livelihoods of millions more, a report released on Monday shows.
Intense floods and droughts, coastal erosion, higher seas and heat waves in coming decades threaten rice, fruit and coffee crops and fisheries on which many of the basin's 65 million people depend, says the report by global conservation group WWF.
"Across the region, temperatures are rising and have risen by 0.5 to 1.5 degrees Celsius in the past 50 years," says the report issued on the sidelines of U.N. climate talks in the Thai capital.
"While rainy seasons may contract over parts of the region, overall rainfall is expected to rise. This means more intense rain events when they occur," it says, threatening crops and triggering floods and landslides.
The basin runs from the Tibetan plateau in China, to Myanmar, Thailand, Laos, Cambodia and Vietnam, where the Mekong empties into the South China Sea.
The delta produces about half Vietnam's rice crop and 60 percent of its shrimp harvest. But rising seas and salt water intrusion threaten harvests and would likely displace farmers.
"Large human populations living in low-lying coastal areas and floodplains make the region highly vulnerable to floods, saltwater intrusion, and rising sea levels," the report said, referring to Ho Chi Minh City, Bangkok and Hanoi.
Delegates from about 180 nations are meeting in Bangkok to try to agree on steps to expand a global effort to fight climate change. The officials are trying to refine a negotiating text that will form the basis of a new climate pact the United Nations hopes will be agreed in December. [ID:nSP450470]
Trying to help poorer nations adapt to the impacts of climate change is a key part of the puzzle.
"CLIMATE JUSTICE"
In the Thai capital about 2,000 farmers, fishermen and indigenous people protested in front of the U.N. conference centre on Monday demanding rich nations step up efforts to curb greenhouse gas emissions.
"Climate justice now," the crowd chanted, as some beat bamboo drums attached with posters reading: "Protect mother earth, no to corporate greed".
Indigenous people from countries including the Philippines, Malaysia and Nepal joined the protest.
"We've come to bring the farmers' voice to the U.N.," shouted a representative from a farmers' group in Indonesia as farmers in green shirts milled around the gate of the U.N. building.
Developing countries accuse the rich of failing to take the initiative in agreeing to deep emissions cuts and want them to pledge billions in funds to help them adapt to climate change and to green their economies.
Eight protesters in black suits marched with masks of each of the G8 leaders, including U.S. President Barack Obama. On the back of the masks were pictures of demons.
The WWF report said more frequent and damaging droughts and floods would lead to major damage to property and loss of life. Access to water would also become tougher in the dry season.
"Warmer temperatures have contributed to declining crop yields. Storms, floods and droughts are destroying entire harvests in the Mekong basin.
"Water scarcity will constrain agricultural production and threaten food security," it added. (Additional reporting by David Fogarty; Editing by Jerry Norton)
| India scraps rice import levy as drought bites |
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India has scrapped its rice import duty in the face of a drought which threatens to cut the domestic harvest by up to 17%.
The world's second biggest rice consumer said it had scrapped the 70% duty until next September, the end of a marketing year expected to witness a drop of at least 15m tonnes in India's crop.
The withdrawal comes amid a growing effort by New Delhi to quell rising food inflation also evident in soaring prices of sugar, of which India is the world's biggest consumer, and pulses, which have jumped 50-70% in a year to record highs.
Crop production has been hit by the weakest monsoon since 1972 which, at its low point last month, brought drought to nearly half of India's 600 districts.
'Administrative constraints'
A move to encourage imports represents a turnaround for a country which has, historically, been the world's third largest rice exporter, after Thailand and Vietnam.
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India's falling rice exports
2005-06: 4.54m tonnes
2006-07: 6.30m tonnes
2007-08: 3.38m tonnes
2008-09: 2.00m tonnes
2009-10: 1.5m tonnes (forecast)
Source: USDA
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World's biggest rice exporters, 2009-10 (year on year change)
1: Thailand, 10.0m tonnes (+17.6%)
2: Vietnam, 6.00m tonnes (+3.3%)
3: Pakistan, 3.30m tonnes (+10%)
4: US, 3.05m tonnes (-1.6%)
5: India, 1.50m tonnes (-25%)
Source: USDA forecasts
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But this inventory has proved only a partial buffer against price rises, in part because it was built at some expense to privately-held stocks, and in part because of hold-ups in getting government rice into consumers' hands.
"Although the government is supplying adequate quantities of rice and wheat to various state governments for distribution… at subsidised prices, several states are unable to make use of the allocated quantities due to financial and administrative constraints," a briefing from US officials in New Delhi said.
"Thus the country is facing the paradox of large government grain stocks and high food prices.
Price gap
Nonetheless, local prices are, at about $275 a tonne, still below those on international markets, signalling that imports are likely to remain scarce for now.
However, India's government, which was re-elected on a ticket of cheap food for the poor, has since last year successively tightened export restrictions in an effort to build stocks and keep prices low.
However, Vietnam reported prices up 5% over the last week, supported by strong demand from the Philippines, the world's biggest importer, whose own crop has been damaged by storms.
The US report also forecast a cut to potentially 82m tonnes in India's 2009-10 rice production, 2m tonnes below current Washington forecasts.
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Why is Vietnamese rice still the cheapest in the world?
Although Vietnam is the world’s second biggest rice exporter the prices of exported rice are nearly the lowest in the world. A VOV reporter talked with Dr Le Van Banh, director of the Mekong Delta Rice Institute about the situation.
The Ministry of Agriculture and Rural Development has proposed a ceiling price of VND3.800 per kilogram and the Vietnam Food Association (VFA) are purchasing around 400,000 tonnes of rice from farmers. However will these measures help to keep the selling and export prices at reasonable level?
Mr Banh: Vietnam harvests its summer-autumn crops at the same as with other countries’ which leads to glut in the market. This is a natural thing. However, farmers do not have the facilities to store rice so it goes rotten and they have no capital to plant the next crop. When the market price keeps decline sharply proposing a ceiling price of VND3.800 per kilogram is a good measure.
If farmers want to sell rice they must pay service fees for traders and they find it difficult to earn VND3.800 per kilogram. In addition, the traders are hesitation to go to remote areas to buy rice.
Are current selling and export prices reasonable?
Mr Banh: It is really difficult for farmers to sell rice at VND3.800 per kilogram to traders. The estimated production cost for the summer-autumn crop is VND2,800 – 3,000 per kilogram. If the Government finances 30 percent of the production costs the ceiling price is still too low. Meanwhile traders purchase rice from farmers at a lower rice.
Why does Vietnamese rice sell for US$100 a tonne lower than Thai rice?
Mr Banh: Firstly, Vietnam must tender to sell its rice. If we win contracts we will sell rice. Vietnam does not have many regular customers so when the rice price on the world market falls, importers force Vietnamese producers to sell at a lower price. Secondly, Vietnamese does not have an established trademark. Lastly, when farmers harvest rice they bag it at home. They do not have stores or warehouses and neither do rice traders, so only when businesses sign contracts can they sell the rise. This leads to a decline in rice prices. In short, the trading strategy is full of snags.
What measures could increase the purchasing and export prices to a reasonable level?
Mr Banh: If we have adequate warehousing we can stock up rice when the price is low and sell it later when the price is high.
By doing this we can keep purchasing and export prices at a reasonable level?
Mr Banh: Earlier, the export price of Vietnamese rice was US$20-40 a tonne lower than Thai rice. Now it hits a record low in the world, even lower than Pakistani rice which is poor quality. Is there any problem with management?
The management of the VFA and corporations is not good. Every year, Vietnam exports around 4-4.5 million tonnes but this year we may export 6 million tonnes because of too large volume of rice to keep in store. Foreign clients are aware of this and are forcing Vietnam to sell at a lower price.
Thank you very much.
Global paddy output hit by erratic monsoon
WASHINGTON (Commodity Online): Bad weather conditions in the countries of Asia have impacted the global paddy production to some extend as UN’s Food and Agriculture Organization foresee 3% decline in paddy output in 2009.
Paddy production this year is expected to be around 668 million tonnes, however this would be high as compared to previous years except the bumper crop production last year, said FAO in its Rice Market Monitor.
It observed that the erratic monsoon was the main reason for the worsening of production outlook of Asia in 2009. Besides India, where the drop is likely to be particularly pronounced, Taiwan, Iraq, Japan, South Korea, Nepal, Pakistan, Sri Lanka and world's largest rice exporter Thailand may also face declines.
Meanwhile, the decline outlook is expected to be counterbalanced with the bumper yields in Afghanistan, Bangladesh, Cambodia, China, Indonesia, Iran, Malaysia, Laos, Myanmar, the Philippines and Vietnam.
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Despite less favorable growing conditions this season, paddy production in Africa is set to remain close to the outstanding 25.4 million tonnes gathered in 2008, reflecting an expansion drive from governments and renewed interest in the sector from both institutional and private investors.
According to the forecast, global rice trade in 2009 was expected to rebound by two per cent to 30.7 million tonnes. The recovery would be mostly on account of greater imports while deliveries to Bangladesh, Indonesia, Malaysia, Sri Lanka, Turkey and western African countries are set to fall, often sharply.
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