Date:23/12/2006 URL: http://www.thehindubusinessline.com/2006/12/23/stories/2006122304751100.htm

Back Global rice price seen flat

Our Bureau

Mumbai , Dec. 22

Despite arrival of freshly harvested rice in many northern hemisphere countries, export prices have continued to gain strength in many origins since September; and relief is unlikely until February/March next year when the next crop is slated to hit the market.

A weakening dollar (the currency in which rice export prices are quoted) may further deepen the tendency for international prices to rise, the Food and Agriculture Organisation (FAO) said in its latest Rice Market Monitor.

World rice trade in 2007 is forecast at 28.9 million tonnes, nearly flat from the current year's 28.6 million tonne. 2005 saw record global rice trade at 29.8 million tonne. According to FAO, in 2007, Bangladesh, Iran, South Korea and the Philippines may import less. For 2007, FAO has forecast shipment of 9.0 million tonne.

Thai rice, up 1.3 million tonnes from the estimate for 2006. However, strengthening of the currency Baht would mean lower export price realisation for Thai rice exporters; but it is also possible, export offers may be jacked up to neutralise the currency effect as happened in recent weeks. Supply constraints in India, the US and Vietnam are expected to depress their deliveries.

World closing stocks at the end of next year would be less than 105 million tonne, it is forecast. Though public stocks are at a comfortable level, India's kharif 2006 rice crop has been below expectation.

Together with tightening wheat situation, lower rice output can potentially push prices higher and reduce export availability. Indian rice export prices (25 per cent broken) have been rising steadily since the beginning of the year and currently stand at around $270 a tonne free-on-board, up from $250 a tonne a couple of months ago.

While Australia and Europe may import more, exports from Thailand are expected to increase because of large public stocks.