Rice to stay near the $600 mark

09:27, January 12, 2010      

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Rice export prices will probably be sustained at about $600 per metric ton "in the near term", after drought and flooding damaged crops in India and the Philippines, an agricultural economist said.

"It is safe to say that the rice price is not going back to $300 per ton any time soon and is likely to remain around $600 in the near term," Samarendu Mohanty, a senior economist at the International Rice Research Institute, said in a report, without citing a definite time frame.

The Asian rice price benchmark jumped to $607 per ton in Thailand last week from 2009's low of $525 as the Philippines, the world's biggest importer, advanced purchases and on concern India may become a net importer after a drought parched crops last year. The grain has averaged $616 since Dec 2, according to Bloomberg data.

The Philippines may need to buy between 500,000 and 1 million tons overseas, adding to purchases from tenders last quarter, the US Rice Producers' Association said in a report published on Jan 8.

State-run National Food Authority purchased about 2.2 million tons of overseas supplies in the tenders for delivery this year, spokesman Rex Estoperez said last week.

Rice futures in Chicago have jumped 34 percent from last year's low of $11.195 per 100 pounds. The March-delivery contract rose 0.6 percent to $15.05 in after-hours electronic trading on the Chicago Board of Trade at 9:48 am Singapore time, after losing as much as 0.5 percent earlier.

Price gains

Futures may rise to $16 per 100 pounds in the next three months as the Philippines remains in the import market, Peter McGuire, managing director at CWA Global Markets Pty said by phone from Sydney yesterday.

Global rice stockpiles are forecast to decline 2.7 percent to 121.1 million tons at the end of the 2009-2010 season because of smaller crops in countries including India, the Philippines, Iraq, Nepal, and Pakistan, the UN Food and Agriculture Organization said last month.

Still, the global inventory will be higher than the 110.8 million tons in the 2007-2008 season, the FAO said.

"Unfortunately, most of these additional stocks, with the exception of Thailand, will not be available to the market in case prices start to rise," Mohanty said in the report.

India's government will have 42 million tons available for sale to the poor in the marketing year ending March 31, against a requirement of 25 million tons, the US Department of Agriculture's Foreign Agricultural Service said last month.

Stockpiles in India "should provide much-needed relief to the market", because it will mean the South Asian nation does "not need to turn to imports", Mohanty said.

India, the world's second-biggest producer, may harvest 71.65 million tons of the monsoon-sown rice, higher than the 69.45 million tons forecast in November, the government said last month.

Warehouses held 15.35 million tons on Oct 1, the start of the new marketing year, the government said on Jan 5.

"Regardless of the press from the Indian government, the belief is widespread throughout the rice trade that something between 2 and 3 million tons of imported rice will be bought there sometime in the next three months," the US Rice Producers said.

Source: China Daily
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