El Nino shrinking rice crop worldwide to spur Vietnamese sales


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Rice exports from Vietnam may increase 14 percent in the first quarter as the strongest El Nino in almost two decades shrivels crops in some countries, spurring importers to build reserves.
Shipments will jump to 1.3 million metric tons in the three months ending March from 1.14 million tons a year earlier, said Tran Tuan Anh, Vietnam’s deputy minister of industry and trade. The world’s third-biggest exporter is already seeing a spurt in demand, he said in an e-mail on Nov. 25. October rice shipments surged 43 percent to 859,000 tons from a year earlier, the highest level since July 2012, government data show.
Indonesia and the Philippines are among nations importing rice after dry weather induced by the strongest El Nino since the record event in 1997-98 hurts crops. Prospects for the event to further strengthen may prompt buyers to secure supplies before prices run up as the United Nations’ Food & Agriculture Organization predicts a decline in global rice output in the 2015-16 season with consumption surpassing production.
“Rice supply and stockpiles will decline, and demand for imports will rise because of unfavorable weather conditions,” Anh said. “The El Nino event occurring this year and prolonging into 2016 will affect production in many countries, especially Thailand, Indonesia, and the Philippines.”
Rough-rice futures on the Chicago Board of Trade have rallied 29 percent from the lowest level in more than eight years in May on concern that the El Nino will shrink global harvest. The contract for delivery in January closed at $12.13 per 100 pounds on Wednesday.
Output decline
Production in Thailand may decline to the lowest in 19 years as dry weather may prompt the world’s top exporter to further restrict plantings to preserve water supply. The Philippines is monitoring rice production closely to see whether there’s need to import more on El Nino after purchasing 750,000 tons from Vietnam and Thailand for delivery from November to March 2016. Indonesia this month agreed to import 1.5 million tons from Vietnam and Thailand and is in talks with Cambodia and Myanmar for additional supplies, according to state-run food company Bulog.
Vietnam’s paddy rice output may increase 0.3 percent to 45.1 million tons this year, VietnamPlus reported in September, citing the Agriculture Ministry. Exports may climb to 7 million tons in 2016 from 6.2 million tons this year, according to the U.S. Department of Agriculture.
Boosting rice exports will still be a challenge for Vietnam as Thailand is looking to draw down the stockpiles it accumulated under a state purchase plan, Anh said. Major importers, especially in Southeast Asia, are also diversifying supply sources and boosting domestic production, he said.
Thailand has about 13.7 million tons of rice in state stockpiles after the military government sold 5 million tons, Chutima Bunyapraphasara, permanent secretary for commerce, said Nov. 16.

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