Rice prices tipped for 15% rise as El Nino trims global output
Rice prices are expected to rise by 10-15% in the first quarter of 2016, with the El Nino phenomenon potentially shaving global rice production and spurring importers to amass reserves.
Major rice importers such as the Philippines, Indonesia and Middle Eastern countries are increasingly concerned about the impact of the prolonged dry spell, said Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association.
“The impact of the dry weather is expected to become clearer by the middle of next year, particularly after Indonesia’s harvest season in April, when we will see how much Indonesia’s rice production will fall,” Mr Chookiat said.
According to the rice industry veteran, the dry weather will halve Thailand’s offseason rice production to an estimated 4 million tonnes of paddy.
Next year’s main crop will inevitably suffer if the drought drags on through 2016.
The Agriculture Ministry earlier said the drought caused by El Nino would cut Thai rice production for this year’s main crop by 2% to 26 million tonnes.
The ministry also expects El Nino to cut global rice production by 1%.
“Right now buyers and sellers alike are somewhat cautious,” Mr Chookiat said. “Sellers are reluctant to sign futures contracts that take too long for delivery and payment.”
Thai rice prices are now quoted at US$365 a tonne for 5% white rice, lower than the prices of Vietnamese grains quoted at $375-380 a tonne.
“The prospects of Thai rice prices are promising next year,” Mr Chookiat said. “We expect rice prices to increase by 10-15% in the first quarter and another 10-15% in the second quarter if the dry spell continues.”
Despite lower production, Thai rice exports are expected to reach 9-10 million tonnes next year, he said, adding that the government still maintains roughly 13 million tonnes in its stockpiles.
“We estimate that there are 7-8 million tonnes of good-quality rice in existing state stocks that are fit for human consumption,” Mr Chookiat said. “This amount could be set aside for domestic consumption and state buffer stocks.”
The Commerce Ministry last week reported that during the 18 months in which the National Council for Peace and Order had administered the country, the ministry sold 5 million tonnes of highquality rice from a combined 18.7 million tonnes left over from various rice schemes, fetching 52.3 billion baht.
Of the 18.7 million tonnes, 12 million tonnes were categorised as Grade P, meaning the grains had successfully passed ministry certification and were a mix of Grades A and B.
Grades A and B are defined as in slightly poor condition and in need of sorting for improvement. Some 6 million tonnes were rated as substandard or Grade C.
Missing rice and rice stored outside the state’s central warehouses totalled 700,000 tonnes.
In the first 10 months of 2015, Thailand shipped 7.82 million tonnes worth 124 billion baht ($3.46 billion). Volume fell by 10.9%, with value down 11.2% from the same period last year.
For the 10 months, the top importers of Thai rice included China, Benin, Nigeria, the Philippines and South Africa.
China’s rice imports rose by 25.9% during the period to 744,449 tonnes. The Philippines’ imports skyrocketed 274% to 564,723 tonnes, while South Africa imported 481,783 tonnes, up 7.1%.
Benin’s imports fell by 34.4% to 652,460 tonnes, while shipments t o Nigeria dropped 36.2% to 623,353 tonnes in the first 10 months.