RICE: Stocks scrape 25-year lows as world gulps bowls of rice 29 Nov, 2007, 0525 hrs IST,Nidhi Nath Srinivas, TNN
NEW DELHI: The world is eating rice much faster than it can produce. For the first time in 25 years, there will be just enough rice left to feed the world for two months at the end of the 2007 marketing season. The main reason for the depletion this year is the growing hunger for rice in China, India, Bangladesh and Indonesia, where it remains the most important foodgrain. With supply tight within India, ordinary rice has become more expensive than wheat, onions, potatoes and sugar.
For consumers across the world, plummeting stocks is plain bad news because when extra rice is available, it acts as a cap and keeps prices steady. In India this year, with impoverished families buying 2 million tonnes (MT) each month from ration shops and the rest from open market, rice stocks have little chance of increasing. As a result, by mid-November, price of local rice shot up close to 15% over last year.
Globally, with less rice available in the trade pipeline, price quotes for Thailand’s high-quality long-grain milled rice — a benchmark for global trading prices — are up more than 16% from a year earlier and 8% higher than in August.
But for paddy farmers it has led to a bonanza. American paddy farmers have got the highest price for their crop in 25 years. US price quotes for both long- and medium-grain rice are the highest since early 1994.
Despite a record rice harvest of 421 MT in 2007-08, the world’s rice basket has never been so empty in 25 years. The reason: the world has consumed a record 424 MT this year. With demand continuing to outpace supply, the rice stocks left over from previous years has dropped to a new low of 74.1 MT, 4% below the levels a year earlier and the smallest since 1983-84.
In India, even after a record and a near-record procurement of rice by the Centre in marketing years 2005-06 and 2006-07, respectively, government rice stocks on October 1 this year fell to 5.5 MT. That is well below the October 1, 2006, stocks of 6 MT. + According to the US department of agriculture, the global stocks-to-use ratio is 17.5%, the smallest since 1976-77. The rapid depletion of Chinese rice stocks is the main reason for most of the decline in global ending stocks since 2000-01, USDA said.
But no rice in the trade pipeline may be just one of the reasons for the steep jump in prices. USDA believes Thai prices are high due to export bans by Vietnam and India (non-basmati only), a stronger baht, expectations of declining global stocks and higher overall commodity prices. The big reason for the rise in US rice prices is the expectation of a very small Australian harvest in April-May 2008 that will sharply reduce Australia’s exports.
