Rice output expected to decline this year

The projected global output of milled rice declined by almost one percent to 500 million tons due to worsening harvest expectations in Asian countries, including the Philippines.

According to the latest market monitor report of the Agriculture Market Information System (Amis), a unit of the Food and Agriculture Organization (FAO), stocks for the current crop year that lasts until mid-2015 has decreased to 179 million tons.

“Rice production [this year was] downgraded on worsened prospects for India, Indonesia, Philippines and Sri Lanka,” the Amis reported. “Stocks [at the end of the crop year was also] lowered substantially since July, on account of Brazil, India, Indonesia, Philippines and Thailand. Forecast now [as of the end of August is] pointing to a one-percent contraction from [the previous year].”

The outlook for rice production diminished, particularly for the Asian countries mentioned, because of erratic rainfall as well as worries over the possible impact of the El Niño weather disturbance on crops in early 2015.

But, at 500.4 million tons, global rice production is still expected to exceed the previous year’s harvest by 0.4 percent, the market watcher said.

In a related statement, FAO economist Concepcion Calpe said rice supplies appear to be ample worldwide, but stocks are very much concentrated in a small number of countries, and often owned by governments.

“This means that these countries can very much influence world prices, by deciding whether to let those supplies flow to the market or not,” Calpe said. “Thailand is still limiting sales of the huge rice volume held in public warehouses, and it has been one of the principal factors underpinning world prices in recent months.”

As for the Philippines, government-held stocks have been dwindling continuously, with less than 15 days’ worth of consumption as of Aug. 1. The National Food Authority recently accelerated the release of its store to 10,000 tons a day from 6,000 tons.

According to the NFA, this was meant to help bring down retail price of commercially available rice. Local market watchers said prices already reached a high of P48 a kilo in recent weeks.

The National Food Authority today is expected to secure through government-to-government deals an additional 500,000 tons of imported rice, which the agency failed to obtain in an open bidding held last month. All tenders for the failed auction went above the NFA’s approved budget.