The advance in rice prices is set to cool as India and Thailand increase sales from stockpiles, boosting global supplies, according to the Deputy Trade Minister of Vietnam, the world’s third-largest exporter.
Expanding harvests in other major producers will also keep prices stable, Tran Tuan Anh said in an interview in Hanoi on July 29. Prices climbed 5.9 percent this month and reached the highest since March as Thailand’s military junta halted sales to inspect grain stockpiled under a state purchase program.
World inventories will climb to the most in nine years in 2014 as production increases, the United Nations’ Food & Agriculture Organization estimates. Stockpiles in Thailand, the biggest shipper after India, are poised to expand to a record 18.5 million metric tons, more than double the average from 2010 to 2012, it says. Rising supplies have helped cut global food costs, which fell for a third month in June.
“Both Thailand and India will have to continue selling from their reserves, so we expect supply will become more abundant,” Anh said. “In addition, rice harvests in producing countries will further reduce pressure on supply, so prices will probably stabilize.”
Rates for Thai 5 percent broken white rice, a regional benchmark, surged 13 percent in less than two months to reach $433 a ton on July 23, the Thai Rice Exporters Association said. Prices slumped 23 percent last year.
Thailand’s National Council for Peace and Order began this month an inspection of the quality and quantity of the state reserves accumulated under a program started in 2011 by former Prime Minister Yingluck Shinawatra. The country plans to sell 18 million tons from the stockpiles over three years, General Prayuth Chan-Ocha, leader of the junta said on July 25.
Shipments from Vietnam in 2014 will be similar to last year, Anh said. The country exported 6.6 million tons in 2013, General Statistics Office data show. Sales will reach 7 million tons and output will increase by 1.5 percent to a record 29.7 million tons, the Rome-based FAO said in its July report.
The nation will set a “very high priority” to preserve and further develop its market share in the Philippines and Indonesia, Southeast Asia’s biggest buyers, Anh said.
The Philippines will boost imports from Vietnam to a total of 1 million tons this year, Francis Pangilinan, Secretary for Food Security, said in a statement last month.
Indonesia’s Bulog is considering imports of 250,000 tons to 500,000 tons of rice, Sutarto Alimoeso, president director at the state food company, said July 3. Imports will depend on the condition of domestic production and prices, he said.
Exports from India will be 10 million tons and from Thailand 9 million tons in 2014, the FAO estimates. Production declines in both countries because of drier weather may prompt them to draw down inventories, which are estimated at 23 million tons in India, the report said.
While global stockpiles are set to expand 3.4 percent to the highest in nine years, they may drop 0.9 percent in 2015, shrinking for the first time in a decade, the FAO said.
Production in Thailand will probably decline 10 percent to about 34 million tons in 2014-2015, a five-year low, as drought hurts yields and farmers curb planting after the end of the subsidy program, the Thai Rice Packers Association said on July 21. India will produce 105 million tons on a milled basis in 2014, 1 percent below the record in 2013, the FAO estimates.