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Rice prices may fall on higher supplies
Analysts predict rice prices to fall in the short term this year, with announcements of plans of the world’s two largest rice exporting countries, Thailand and India, to stock the world’s supplies
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Analysts predict rice prices to fall in the short term this year, with announcements of plans of the world’s two largest rice exporting countries, Thailand and India, to stock the world’s supplies.
The Thai government’s plan to off-load some of its rice stocks may drag the market prices down in the near term, International Rice research Institute (IRRI) Social Sciences Division head Samarendu Mohanty said Monday.
“The price may also go down further with the Indian government planning to remove an export ban on non-basmati rice,” Mohanty said before participants attending the Thailand Rice Convention 2009 in Bangkok, Thailand.
Basmati is a popular Indian fragrant rice variety.
Global rice price analyst Robert S. Papanos described the rice price condition as “now hostage to those two governments’ decisions”.
“Whether the price of rice will go down or go up will depend on the governments of Thailand and India,” he said.
Thailand and India are the largest and fifth largest rice exporters in the world, respectively.
Last year, India exported 2.5 million tons of rice from a total rice production of 95.7 million tons.
Thailand, from a total production of 28.9 million tons, exported about 10.01 million tons.
The intervention from both countries will likely affect prices, because an excess rice supply in
both countries will force prices down further with demand predicted to remain stagnant in the
short term.
According to the Thai Rice Exporter Association, rice prices currently stand at between US$469 and $470 a ton.
This price has slowly recovered from a deep slump earlier this year, reaching $300 a ton on the back of falling commodity prices.
Thailand Development Research Institute president Nipon Poapongsakorn was even more confident, saying the fall in rice prices may happen within the next three months.
Nipon’s projection was supported by the fact that last week the Indian government relaxed non-basmati rice exports.
Despite the Thai and Indian governments, concerns have also arisen that Indonesia, the world’s third largest rice producer, may increase its export quota this year on the back of higher production.
This year, Indonesia predicts a total production of up to 38 million tons with a total consumption of 30.9 million tons, leaving it with an excess of 7.1 million tons.
Indonesia has managed to regain rice self-sufficiency status thanks to the government’s recent economic policy to increase subsidies for seeds and fertilizer for farmers.
