Tue, Oct 11, 2016 - Page 11 News List

Rice could extend biggest price losses in three years

DEMAND:A measure by Nigeria’s central bank blocking importers from accessing foreign exchange markets has caused imports to fall at the world’s second-largest buyer

Bloomberg

Rice prices might extend losses after the biggest quarterly drop in three years as a revival in India’s monsoon rainfall helps boost global production to a record.

The price of 5 percent broken white rice, an Asian benchmark, might decline as much as 10 percent in the final three months of the year as harvests start in coming months and demand remains depressed, SAT Swiss Agri Trading SA CEO Jac Luyendijk said.

Prices slumped 14 percent in the three months ended on Sept. 30, the biggest decline since the third quarter of 2013.

Global milled rice production might total a record 481.7 million tonnes in the 2016-2017 season, according to the US Department of Agriculture.

Output in India, the top rice exporter since 2012, is expected to be the second-highest ever as farmers increase planting. The country recorded its first normal monsoon rainfall in three years, rebounding from back-to-back shortfalls.

“We have many exporting countries fighting for the same bone, which automatically puts pressure on prices,” Luyendijk said via e-mail. “Our price outlook for the coming 4-6 months is negative.”

The department last month said India would export 10 million tonnes of rice this year and boosted its forecast for shipments next year to 9.5 million tonnes from 8.8 million tonnes estimated a month earlier.

Thailand’s main crop, which is harvested starting this month, is forecast to increase about 4.5 percent to 25 million tonnes, Thai Office of Agricultural Economics Deputy Secretary-General Jantida Meedech said.

About 80 percent of the output is to come on to the market this quarter.

The export price of rice from India is about US$20 per tonne cheaper than from Thailand, according to the Thai Rice Exporters Association.

“Increasing crop arrivals in Asia and thin international demand will likely continue to pressure prices,” International Grains Council analyst Jade Savage said.

Shipments to Nigeria, the world’s second-largest buyer, have been limited by government efforts to prevent cross-border trades and a reduction in purchasing power, he said.

Nigeria’s central bank stopped importers of 41 items, including rice and palm oil, from accessing official foreign exchange markets in June last year. The measure was part of a plan to prop up the Nigerian naira after it plunged against the US dollar following a drop in the price of crude oil, the country’s biggest source of foreign exchange.

Nigeria’s imports might drop 4.5 percent to 2.1 million tonnes this year, and decline to 1.9 million tonnes next year, the department said.

“Only unexpected demand from Asia or the reopening of rice imports into Nigeria could have some stabilizing impact on prices,” Luyendijk said. “As long as this demand is not around, we really look to an extremely bearish scenario.”

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