prices higher, said investor Jim Rogers, chairman of Rogers Holdings.
"The world is very vulnerable to production problems," Rogers, who
predicted the start of commodities rally in 1999, said in an interview.
"We're already seeing it in India. That's going to mean higher prices
somewhere along the line."
Rice stockpiles of the world's five largest exporters are forecast to
plunge by a third to the lowest level in five years, and below last year
when prices surged, Concepcion Calpe, senior economist at the United
Nations Food and Agriculture Organization, said at a conference in Bali
today.
Global rice prices soared to a record $25.07 per 100 pounds in April
2008 on declining inventories, sparking concern over a global food
crisis. This prompted exporters including India and Vietnam to curb
sales, cutting supplies for countries like the Philippines, the biggest
importer. Prices almost halved since then as farmers boosted production,
replenishing stockpiles.
The contract for November delivery jumped 1.9 percent to $13.48 per 100
pounds yesterday on the Chicago Board of Trade, the steepest gain since
Aug. 31, and was little changed at $13.495 at 2:42 p.m. in Singapore.
Total stockpiles held by Thailand, Vietnam, the U.S., Pakistan and India
will fall to about 20 million metric tons at the end of the marketing
year on Sept. 30, from 30 million tons a year earlier, on
lower-than-forecast crops and rising demand for imports, Calpe said today.
Drought, Flood
The weakest monsoon in India since 1972 may cut the nation's rice
production by about 18 percent in the marketing year that began Oct. 1,
Calpe said in an interview Oct. 7.
Floods now affecting the south of India will also reduce production,
Junior Food Minister K.V. Thomas said Oct. 6. The flooding will cut
production by at least 3 million tons, the Hindu Business Line reported
today, citing N. Raghuveera Reddy, state farm minister for Andhra Pradesh.
The last time stockpiles of the five largest exporters fell by a third
was in 2002-2003, when India "had a bad monsoon, and prices then were
low," Calpe said. Rough rice futures on the Chicago Board of Trade
reached a low of $3.52 in April 2002.
Tropical Storm Ketsana and Typhoon Parma destroyed at least 7 percent of
the Philippines fourth-quarter crop in the past week and wiped out
inventories in parts of the country. The Philippines may import 2
million tons of rice in 2010 to cover losses from the storms, National
Food Authority Assistant Administrator Jose Cordero, said in an
interview in Bali today.
Shelving Exports
Indonesia state food company Bulog said Oct. 6 the country may shelve
plans for its biggest rice exports in at least 50 years if dry weather
caused by El Nino causes production to miss a state forecast of 40
million tons.
Rice production in Pakistan, the world's fourth-largest exporter, is
forecast to drop 4.8 percent this year from a year ago, Safder Hussain
Mekhri, a vice-chairman with the Rice Exporters Association of Pakistan,
which accounts for about 95 percent of the nation's shipments, said in
an interview.
Output may drop to 6 million tons this year from 6.3 million tons last
year, he said, while exports may be little changed at 3.1 million tons,
Mekhri said.
"Supply is going to get tighter," Rogers said in an interview late
yesterday. "Production is going down for a variety of reasons. Many
farmers cannot get loans," limiting their ability to raise yield and
expand acreage, he said.
El Nino
Higher reserves in China, the world's largest grower and consumer, may
help slow the decline in total global stockpiles to 3 percent to 117.4
million tons, Calpe said.
Still, "we've not considered the flooding in the Philippines and El Nino
in Indonesia because we did the estimate on Sept. 25," Calpe said. "Next
year, if there's a bad year, then things are going to be more serious
because then we'd have to work from much lower stocks."
The impact of El Nino, which can delay rains in Asia and cause flooding
in South America, may also push global production lower next year,
forcing affected countries to draw down inventories, she said.
"Indonesia is especially at risk and Australia of course," Calpe said,
referring to El Nino. The weather phenomenon may also lower yields in
South America "because if it's cloudy, they won't get the proper sun and
that's very important for yields."
Typhoon Damage
While the slump in Indian production will drag total volume down, not
all of the major exporters will see output and stockpiles drop, Calpe said.
Rice production in Vietnam, the world's second-largest exporter, may
climb to a record of between 37.9 million tons and 38.3 million tons in
2010, Pham Van Du, deputy director general of Vietnam's Crop Production
Department, said yesterday.
Typhoon Ketsana destroyed at least 100,000 tons of the Vietnamese rice
crop, Pham said in an interview in Bali today. The losses are unlikely
to lower significantly the nation's rice output, he said. Production is
forecast to reach a record 37 million tons this year, the USDA said in a
report this week.
"At the moment, there is no evidence of supply shortages in the market,"
Calpe said Oct. 7, adding that last year's record prices were "not
really triggered by shortages, it was an overreaction by governments and
the market."
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