No panic, but rice price pressure building: IRRI

Ample supplies mean the rice market does not need to panic about rising demand from the Philippines, India and Africa or the El Nino threat to production, an industry expert said on Friday.

"The Philippines is the first big blow to the market, and secondly, what makes people a little twitchy is India importing," Robert Zeigler, director general at the International Rice Research Institute, told Reuters in a phone interview.

"I don't think we'll have shortages but what will happen is we'll just have higher prices," said Zeigler.

Typhoon-hit Philippines, the world's largest rice buyer, has been the most aggressive so far in securing supplies, as it tenders for a record 600,000 tonnes next month, after contracting to buy 250,000 tonnes last week.

India, normally a major exporter, has also been in the market to buy rice to prevent possible shortages after severe weather ravaged rice fields this year. But Indian state firms have yet to place orders due to high prices offered.

El Nino, which can bring drought and weaker monsoons in Asia, is also a threat to rice production.

"Clearly there's upward pressure on prices, but I don't think there's reason for panic," he said.

Zeigler said prices are unlikely to return to record levels seen in 2008 given large stocks in big consumers China and India.

While China has kept its rice inventory levels a state secret, India's government-held rice stocks were projected to be around 15 million tonnes by October 1, the highest level since 2002, according to a United States Department of Agriculture attache report last month. Zeigler said there is a need for global rice trading volumes to increase by at least 10 million tonnes a year to help stabilise prices.

Globally traded rice stands at around 30 million tonnes, only about 7 % of world production.

Export curbs by producers including India helped drive benchmark Thai prices to a record USD 1,080 a tonne in April 2008, sparking food riots in some parts of the world.

Thai prices have halved since then, although Vietnamese prices are rising on demand from the Philippines, Hanoi's biggest market.