Rice ExportsBy Bangkok Pundit Jun 16, 2008 12:01AM UTC
This is more a collection of articles and quotes about rice prices, but I will have a couple of comments at the end.
The Nation on that rice exports might be better in the future:
“I personally believe we are now in a sellers’ market,” said Vichai Sriprasert, honorary president of the Thai Rice Exporters Association and CEO of Riceland International, the seventh-largest rice exporter in the country.
“The rice market has been a buyers’ market for the perhaps 40-50 years, since the Green Revolution when new technologies introduced in the mid-1960s made it possible for farmers to produce more rice and grow rice two to three times a year,” Vichai said, addressing a seminar on the world food crisis hosted by the Konrad Adenauer Organization in Bangkok.
In 2007, Thailand’s rice exports hit a historic high of 9.55 million tons, earning the country 3.6 billion dollars.
During the first four months of 2008 rice exports had already reached 4.07 million tons, earning the kingdom 1.91 billion dollars, a hike of 73 per cent over the same period last year.
BP: That has since risen to 5.2 million tonnes until the end of May. Given this it is likely Thailand will earn at least 5 billion dollars this year as a number of foreign countries who worked out country-to-country deals with Thailand to ensure supply after India and Vietnam banned exports – some of these countries have been concerned about their dependency of non-Thai rice exports and looking for alternative supply.
The Indian ban prompted Vietnam to announce its own export ban in April, which helped jack the world rice price up to 1,100 dollars a ton in June, compared with 340 dollars a tonne in November.
Both India and Vietnam, the two largest rice exporters after Thailand, have now lifted their export bans and prices are starting to edge down on the world market.
“I think the price of nearly 1,000 dollars a tonne will not be sustainable,” predicted Ammar, one of Thailand’s top rice experts.
“Assuming no adverse natural events in producing areas, rice prices will probably slide back to reestablish a relationship with other cereal prices, in particular with the maize price,” Ammar predicted.
One such adverse natural event was last month’s Cyclone Nargis in Myanmar, which is expected to cause a 3-million-ton shortfall in the country’s rice crop this year, the impact of which has yet to be felt on the global rice market.
BP: I was reading something similar about Ammar saying “[a]ssuming no adverse natural events” and thinking to myself, “huh?!” there has been a cyclone in Burma so why he is still basing his prediction on this basis. The only reason I can think of that it was a natural event which did not affect only crops, it affected people too. Depending on how many people have died or will eventually die, it it hard to calculate the effect on the rice shortfall. To put it bluntly, dead people don’t need rice. Nevertheless, a 3 million ton shortfall will effect rice supply.
Thai Crisis notes, with a chart, the large increase in exports in value over the last year:
Now if we compare year-on-year (april 2007), we have +62 % in volume and a whooping +137 % in value.
One problem which might arise is the large amount of paddy to be harvested this month:
Around 7.6 million tonnes of paddy are expected to come on to the market during the Thai harvesting season in June, depressing prices. But Mingkwan said he was confident Thai prices would remain firm because of a government guaranteed price scheme.
BP: Domestically this is not such a problem as the government has implemented a minimum price guarantee and can’t go back on now, but it is hard to know what the effect will be on the world price.