El Nino May Curb Thailand, Philippine Rice Output

El Nino threatens to parch rice crops in the Philippines, the world’s biggest importer, and in Thailand, according to officials in both countries.

“Between 20 to 30 percent of the areas planted to rice in provinces hit by El Nino are at risk of damage due to the dry spell,” Philippine Agriculture Undersecretary Emmanuel Paras said in a phone interview from Manila today. “That’s why we’re planning measures to counter the effects,” including 2 billion pesos ($43.7 million) of spending, he said.

Thailand’s output of unmilled rice may drop 15 percent to as low as 27 million metric tons in the year that began Oct. 1, from 31.65 million tons a year earlier, Apichart Jongskul, secretary general of the Office, said in an interview in Bangkok yesterday.

Lower output in Thailand may limit its capacity to boost shipments to meet additional purchases from importing countries including the Philippines, helping support global prices.

If the Thai government decides to hold on to its 6 million ton stockpile, “we could see a supply shortage,” said Kiattisak Kanlayasirivat, director of Novel Commodities in Thailand, which trades about $600 million worth of rice a year.

Rice futures rose to a record in April 2008 in Chicago and the Asian benchmark export price reached its highest level a month later as the Philippines boosted imports and exporters including India and Vietnam curbed shipments, adding to concerns of food shortages that sparked protests from Haiti to Egypt.

Price Jump

The export price of the 100 percent grade-B Thai white rice, the benchmark in Asia, rose 16 percent to $607 a ton in the week of Jan. 13, from last year’s low. Rough rice futures are up 26 percent to $14.10 per 100 pounds in Chicago from last year’s low.

Importers will have to rely on exports from Thailand, the biggest shipper, after cheaper supplies from Myanmar and Pakistan dry up at the beginning of March, Rakesh Singh, a rice trader at New Delhi-based Emmsons International Ltd. said today.

Vietnam, the second-largest rice exporter “is already sold out for this crop because whatever they have, they have committed to the Philippines,” he said.

While the U.S. Department of Agriculture increased its estimate for this year’s global rice stockpiles by 1.2 million tons from a month earlier to 90.66 million tons on Jan. 12, the additional supply was seen coming from India and China, which were not forecast by the USDA to increase exports.

Philippine Provinces

“Unfortunately, most of these additional stocks, with the exception of Thailand, will not be available to the market in case prices start to rise,” Samarendu Mohanty, a senior economist at the International Rice Research Institute in Los Banos, Philippines, said in a report sent to Bloomberg News by e-mail on Jan. 10, before the USDA released new estimates.

Twenty Philippine provinces, including Nueva Ecija, Bulacan, Pampanga and Sultan Kudarat, received between 20 percent to 59 percent below-normal rainfall in the past three months, Daisy Ortega, senior weather specialist at the Philippine Atmospheric Geophysical and Astronomical Services Administration said in an interview Jan. 8.

Nueva Ecija, the largest rice producing province, Pampanga and Bulacan are located in Central Luzon which accounted for 18 percent of the national output in 2008, according to the Bureau of Agricultural Statistics Web site.

El Nino may cause water supply shortages, hurting rice planting in Thailand March through May, Apichart said. Output may further drop as insect infestation spread to other rice areas, he said.

The reduction in Thailand’s output “is quite a lot,” Chookiat Ophaswongse, adviser to the Thai Rice Exporters Association, said by phone from Bangkok today. “It will drive prices significantly higher.”

Higher stockpiles in Thailand will allow the exporter to meet its sales forecast of 10 million tons this year and keep domestic supplies stable, the government’s Apichart said.

“Until something goes drastically wrong somewhere,” prices should hold, Emmsons’ Singh said.