Global trade for milled rice down on El Niño

The forecast global output volume for milled rice in the crop year July 2015 to June 2016 is down 2.9 million tons to 475.8 million tons, mainly on lower production expectations in Southeast Asian countries such as the Philippines.

According to the latest outlook report from the United States Department of Agriculture (USDA), the latest forecast meant the first decline in global output since crop year 2009 to 2010.

USDA’s Economic Research Service (ERS) said local events in Southeast Asia pulled down the expected output.

In Burma (Myanmar), widespread flooding beginning June destroyed around 1.2 acres of rice fields. El Niño has also affected Indonesia, which has not seen production growth over the past decade.

Citing Philippine government data, the ERS said the 2015 to 2016 production forecast for the Philippines was lowered by 400,000 tons to 12 million tons.

“The third quarter (July-September) is being adversely affected by deficient rainfall and drought in the central and southern growing areas,” the agency said.

Still, the ERS noted that “production in the Philippines is still up one percent from a year earlier and the highest on record.”

Yesterday, the National Food Authority (NFA) said its highest decision-making body has decided to award to Thailand and Vietnam the supply contracts for the country’s needed buffer stock in preparation for the El Niño phenomenon.

The contracts cover shipments totaling 750,000 metric tons of long grain white rice.

During the proceedings last Thursday, Vietnam offered the best bid for 450,000 tons at $426.60 per ton. Thailand offered the same for 300,000 tons.

The supply contract is worth a total $319.95 million (around P14.9 billion).

Both Thailand and Vietnam offered prices above the cap early in the bidding.

The NFA’s committee for government-to-government procurement rejected both offers and asked the bidders to revise their tenders.

The entire volume is expected to arrive by the end of March 2016.

“The importation is intended to beef up government inventory in preparation for the looming impact of the El Niño phenomenon,” NFA administrator Renan B. Dalisay said in a statement.

“Drought due to El Niño is predicted to intensify beginning October this year and will last until May 2016,” Dalisay said.

In the first half of 2015, production of palay was pegged at 8.32 million tons, a decrease of 0.7 percent year-on-year.

The PSA said first-semester output was 56,000 tons less than the 8.38 million tons harvested in the same period of 2014.

The slight decrease was attributed to a 1.7-percent contraction in the harvest area, which was recorded at 2.1 million hectares.