Rice stockpiles held by the world’s five biggest exporters will likely decline next year, tightening global supply and supporting prices, the United Nations said.
“The danger will be for next year,” Concepcion Calpe, senior economist at the Food & Agriculture Organization of the U.N., said in a phone interview yesterday. “The U.S. will likely revise production downward and stocks held by major exporters will be in a tighter situation than this year. They’ll export a lot this year.”
Shipments from Thailand, Vietnam, Pakistan, the U.S. and India, which account for about 80 percent of global trade, will gain 8.4 percent from a year earlier to 24.7 million metric tons this year, according to Bloomberg calculations based on Oct. 8 estimates by the U.S. Department of Agriculture.
Rough-rice futures in Chicago have surged 51 percent from this year’s low of $9.55 per 100 pounds on June 30 as floods destroyed crops in Pakistan and Thailand, dry weather curbed yields in the U.S. and Typhoon Megi wrecked harvests in the Philippines, the world’s biggest buyer.
“Prices are unlikely to fall,” Calpe said from Rome. “They need to have a good harvest this year to build up stock,” she said, referring to Thailand and Vietnam, the two biggest exporters.
Rice gained for an eighth day today, heading for the longest winning streak for a most-active contract since March 2008. The contract climbed as much 0.8 percent to $14.495 per 100 pounds, the highest since Feb. 12, and traded at $14.48 at 12:12 p.m. Singapore time.
“These weather patterns are making the already tight market even more confusing,” Dwight Roberts, president of the U.S. Rice Producers’ Association, said in an e-mail in response to Bloomberg questions. “This market has volatility stamped all over it. Every day, weather developments bring a new twist.”
The Thai export price, the benchmark for Asia, may rise to as high as $550 a ton by the end of the year, from $510 yesterday, when the Philippines enters the global market to meet its import needs, according to Roberts.
The main harvest in Thailand may drop as much as 20 percent to less than 20 million tons after the worst floods in four years hit the nation’s growing regions, Banjong Tungjitwattanakun, vice president of the Thai Rice Mills Association, said yesterday.
The main Thai crop, typically harvested from October to April, accounts for 75 percent of the nation’s annual output.
In Vietnam, the second-largest shipper, rice crops were flooded after rains earlier this month, Nguyen Hieu Tam, head of rice research at Hanoi-based Vietnam Market Analysis and Forecast Joint Stock Company, said in an e-mail.
“There has been no official statistics about the loss to agriculture,” Nguyen said. “The loss has, reportedly, reached hundreds of thousands hectares of paddy.”
The rice harvest in the U.S., the world’s fourth-largest exporter last year, may be at least 10 percent smaller than the latest USDA estimate, missing a forecast for record output and pushing prices higher, Roberts said Oct. 11.
The USDA lowered on Oct. 8 its estimate for this year’s national rice paddy production by 5 percent to 11 million tons and forecast that average yield per acre would drop to the lowest since the 2005-2006 season.
The lower output forecasts for Thailand and U.S. came after harvests in Pakistan were devastated by flooding. This week, Typhoon Megi lashed the Philippines, widening the Southeast Asian nation’s production deficit.
The country had lost 222,336 tons of rice from the storm as of yesterday, Philippines Agriculture Spokesman Salvador Sallacup said, citing initial estimates from affected areas. Losses may reach 600,000 tons, Agriculture Secretary Antonio Fleta said Oct. 18, a day before the storm made landfall.
Losses may widen as more areas report the extent of the damage, Sallacup said. The storm affected 234,980 hectares (580,648 acres), including Cagayan Valley and central Luzon, the country’s two largest rice-growing regions, Sallacup said yesterday. That’s bigger than the 157,000 hectares estimated by Fleta two days earlier.
To contact the editor responsible for this story: James Poole in Singapore at firstname.lastname@example.org