Firmness in global rice prices seen

International prices of rice are expected to remain firm in the next few months due largely to tight supplies in the wake of a sharp fall in global inventories over past one year.

As a result, the Indian rice, especially the par-boiled rice, is likely to remain price competitive though the supplies may be under strain.

According to the estimates made by the United Nations Food and Agriculture Organisation (FAO), the total global inventories of rice at the close of the 2004-05 marketing seasons of different countries were around 97 million tonne, about six million tonne lower than their opening level.

Most of the traditional rice exporters have reported reduced stockpiles. These include India, China, Egypt, Pakistan and Thailand. Only the US is expected to have larger inventories at the close of the year than their opening levels.

"World rice production in 2004 was insufficient to meet consumption and the reserves had to be drawn down to cover the gap," the FAO's latest Food Outlook report points out.

Consequently, the international rice prices rose in 2004-05 season to their highest level since 1998. The FAO rice price index (1998-2000 as the base) averaged around 104 for the whole year, the highest level since 1998 and 22 points more than in 2003-04.

The uptrend firmed up since November 2004 with the index tending to stabilise around 106, about five points higher than in previous November and three points more than in previous December. The strength reflected adverse effect of weather on rice crops in some key paddy producing countries.

On the other hand, the FAO expects the import demand to remain strong in several of the major rice importing countries. Import demand may rise in even some of those countries where governments have imposed curbs or high tariffs on rice imports.

For instance, FAO anticipates rice deliveries to Indonesia to rise despite the government ban on imports till June. The state trading enterprise of that countries was already reported to be considering buying rice from the world market to avert food scarcity.

Similar concerns are anticipated to boost imports into Bangladesh where the domestic prices of rice have spurted sharply.

The FAO report concludes: "International rice prices are expected to keep rising in the coming months as supplies in several of the major exporting countries appear rather tight."