Rice Output in Australia May Jump Fourfold on Rain, Growers Say

Rice production in Australia may almost quadruple next harvest as heavier-than-usual rainfall boosts water supplies following a decade of drought, a growers’ group said after raising its production forecast.

Output may be 800,000 metric tons compared with an early September’s forecast for 600,000, said Ruth Wade, executive director of the Ricegrowers’ Association of Australia, based in Leeton, New South Wales. The last harvest was 205,000 tons, according to exporter Ricegrowers Ltd., which trades as SunRice.

A La Nina event has brought wetter-than-normal weather to eastern Australia, including New South Wales, where rice is grown. The rains have replenished reservoirs after years of drought slashed Australia’s rice output in 2008 to the lowest level since the 1920s.

“We have got pretty secure water now,” Wade said by phone from Sydney today. “People will be much more confident that they will be able to plant as much as they can and have access to water to finish it.”

Rice for November delivery in Chicago rose 0.6 percent to $13.675 per 100 pounds at 4:09 p.m. Melbourne time. The futures touched a seven-month high of $13.87 on Oct. 15.

Planting of the Australian crop started earlier this month and will finish by early November, Wade said. The rice will be harvested in April.

Australia grows medium-grain rice compared with the long-grain varieties in Thailand and Vietnam, the top two exporters. Before the drought, production regularly exceeded 1 million tons, with exports of more than 600,000 tons, according to the Australian Bureau of Agricultural and Resource Economics. Output in 2008 fell to 19,000 tons, according to SunRice.

Water Plans

Output this decade may be curbed by government plans to reduce water allocations to irrigators and boost environmental flows in the Murray-Darling Basin. Allocations should be cut as much as 37 percent, according to a preliminary report released Oct. 8 by the Murray-Darling Basin Authority.

“It would have a significant impact,” Wade said. The group is using the authority’s consultation framework and parliamentary-committee process “to get it rebalanced to something that talks equally about the environment and social and economic impacts,” she said.

The basin authority will submit a final report to the government by the end of next year, while a separate parliamentary committee announced last week will examine the “human cost” of the proposals.

The La Nina, characterized by cooling temperatures in the Pacific Ocean, will persist into at least early 2011, Australia’s Bureau of Meteorology said Oct. 13. The Southern Oscillation Index, an indicator of the events, in September reached the highest monthly value since 1973, the bureau said.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE