Rice prices to remain high in 2008
Rice production in Asia, Africa and Latin America is forecast to
reach a new record level in 2008, FAO said today, warning that world
rice prices could remain high in the short term, as much of the 2008
crops will only be harvested by the end of the year.
"World paddy production 2008 could grow by about 2.3 percent reaching
a new record level of 666 million tonnes, according to our preliminary
forecasts," said FAO rice expert Concepcion Calpe. Production growth
could even be higher if recent appeals and incentives to grow more rice
lead to a larger expansion of plantings, according to the Rice Market.
"But the cyclone disaster in Myanmar could well worsen our forecast,"
she added. Myanmar The destruction of Myanmar's food basket may sharply
decrease national rice production and impair access to food, according
to first FAO estimates.
The cyclone damage could worsen the current global rice production
outlook. The cyclone struck when paddy farmers were harvesting their dry
season crop accounting for 20 percent of annual production. Entire
rice-growing areas are flooded and many roads and bridges are
impassable. Several rice warehouses and stocks were destroyed. Rice
prices in Rangoon have already surged by nearly 50 percent.
Myanmar may need to turn to neighbouring countries, such as Thailand
and Viet Nam for rice imports. This could lead to further pressure on
world prices. Major gains "For the first time, paddy production in Asia
may surpass the 600 million tonne benchmark this year, amounting to 605
million tonnes," Calpe said.
"Major gains are expected all across the region. Bangladesh, China,
the Philippines, Thailand and Viet Nam could register the largest gains.
Prospects are also buoyant for Indonesia and Sri Lanka, despite some
recent flood-incurred losses," Calpe said.
Assuming normal rains in the coming months, rice production in Africa
is forecast to grow by 3.6 percent to 23.2 million tonnes in 2008, with
large expansions anticipated in Ivory Coast, Egypt, Ghana, Guinea, Mali
and Nigeria.
Paddy production in Latin America and the Carribbean is expected to
rebound by 7.4 percent to 26.2 million tonnes in 2008. Production
prospects, however, are negative for Australia, the United States and
Europe. Prices Rice prices have skyrocketed by around 76 percent between
December 2007 and April 2008, according to the FAO Rice Price Index.
International rice prices are expected to remain at relatively high
levels, as stocks held by exporters are expected to be reduced heavily.
In addition, other large importers will probably return to the
international market to buy rice, including the Islamic Republic of
Iran, Saudi Arabia, Nigeria and Senegal.
"Prices are expected to remain extremely firm, at least until the
third quarter of 2008, unless restrictions on exports are eased in the
coming months," Calpe said. In an attempt to avoid food scarcities in
their own countries, major rice exporters have recently imposed export
bans, taxes or minimum ceilings.
"These measures further restricted the availability of rice supplies
on international markets, triggering yet more price rises and tighter
supply conditions. At the moment, only Thailand, Pakistan and the United
States, among leading exporters, are exporting rice without any
constraints," Calpe added. Auctions by the Philippines to import massive
volumes of rice have also contributed to record rice prices.
For prices to fall, favourable weather conditions must prevail in the
coming months and governments relax rice export restrictions.
Even then, rice prices are unlikely to return to the levels of 2007,
as producers have to pay much more for their fertilizers, pesticides and
fuel.
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