May 16 (Bloomberg) -- Rice exports from India, the world’s second-largest grower, are poised to slump from a record as supplies from Vietnam, Myanmar and Pakistan widen a global glut, according to the International Rice Research Institute.
Shipments including the aromatic basmati variety may decline 32 percent to 7 million metric tons this year from 10.25 million tons in 2012, said Samarendu Mohanty, a senior economist with the Philippines-based organization. This compares with 9 million tons estimated by the Foreign Agricultural Service of the U.S. Department of Agriculture.
Corn and wheat prices have fallen in Chicago this year, while rice is little changed as farmers in the U.S. increase production after the worst drought since the 1930s wilted crops last year. Goldman Sachs Group Inc. is bearish on agriculture this year because of prospects for higher output in the Americas and rising reserves, the bank said in a report May 14.
“There’s a lot of surplus globally and this is a buyer’s market at present and this will continue until the end of this year,” Mohanty said in a phone interview. “Thailand will be selling aggressively at low prices to reduce its stockpile and capture some of India’s markets of cheap quality rice in Africa and the Middle East.”
Production of rice, the staple for half the world, will climb 2.1 percent to 497.7 million tons in 2013, while world inventories are forecast at 171.8 million tons as supply beats consumption, says the United Nations’ Food & Agriculture Organization. Thailand may ship 8.5 million tons to 9 million tons, while Vietnam is set to sell 7 million tons this year, Mohanty said. Thailand exported 6.95 million tons and Vietnam sold 7.72 million tons in 2012, according to the Foreign Agricultural Service.
Any decline in shipments from India will be met by supplies from Vietnam, Pakistan, Myanmar and Cambodia and is unlikely to boost global prices, said Concepcion Calpe, the secretary of the FAO’s inter-governmental rice group.
“The Thai government will have to sell the rice it owns at a loss, which may bring world prices down,” she said in an e-mail yesterday. “Only if there is a major production shortfall somewhere in the world, could this be avoided.”
Stockpiles in Thailand jumped after Prime Minister Yingluck Shinawatra’s government started buying grain from farmers in 2011, fulfilling an election pledge to boost rural incomes. Milled rice reserves in Thailand may jump 29 percent to 16.3 million tons in 2013, according to the Rome-based FAO.
The free-on-board price of 25 percent broken rice in Vietnam, an Asian benchmark, has fallen to $361 a ton in April from $373 in January, while the rate in India climbed to $418 from $398, according to FAO. Exporters in Pakistan offered rice at $378 in April, FAO data show. Rough-rice futures on the Chicago Board of Trade traded 0.3 percent lower at $15.180 per 100 pounds at 12:05 p.m. in Mumbai today.
Rice prices in India rose after the government increased the minimum price at which state agencies buy the grain from farmers, Mohanty said. The Commission for Agricultural Costs and Prices, which advises the government, recommended that prices of common paddy be raised to a record 1,310 rupees per 100 kilograms (220 pounds) for the 2013-2014 season.
“Rice offered by Vietnam and Myanmar is very much cheaper than India,” said Prem Garg, managing director of Shri Lal Mahal Ltd., a New Delhi-based exporter. “Our prices are higher due to the minimum support price assured by the government to the farmers.”
To contact the reporters on this story: Pratik Parija in New Delhi at email@example.com;
Prabhudatta Mishra in New Delhi at firstname.lastname@example.org
To contact the editor responsible for this story: James Poole at email@example.com