India Kharif season may see normal sowing in rice

The ensuing kharif season may see “normalcy” returning to rice in more ways than one. To start with, assuming a not-too-bad South-West monsoon, production could rebound to 80 million tonnes (mt) or more, from the sub-75 mt of kharif 2009. Last year's monsoon failure did not hit Punjab and Haryana: The near-universal irrigation cover with farmers, in conjunction with dry weather conditions (that helped minimise incidence of pests and diseases), actually led to higher output in the two States. On the other hand, the drought definitely impacted other major rice-growing areas, especially Uttar Pradesh, Andhra Pradesh, West Bengal, Chhattisgarh and Orissa. One could expect all these States to report larger crop sizes this time round. AP, for one, is looking to produce 8.4 mt of rice this kharif, the same as it did in 2008. “Last year, our paddy area dropped from 28 lakh hectares (lh) to 20.63 lh. We hope to get back to 28 lh this time,” the State's Agriculture Minister, Mr N. Raghuveera Reddy, told Business Line. Inclusive of Rabi, the State is targeting a rice output of 14.3 mt for 2010-11, against the previous year's 10.65 mt. Global markets It is not only domestic production that might witness a restoration of normalcy; the same applies to global rice markets as well. Thai rice with 25 per cent broken content, is now quoting at $400 a tonne, having shed roughly $100 since the start of this calendar year and down from the average $600-plus levels of 2008. The same quality rice of Vietnamese and Pakistani origin is selling even lower at $325-330 a tonne. While the current world prices are still higher than their 2007 average of $290-300 a tonne, the bull run of the last couple of years - benchmark Thai rice almost scaled $900 a tonne in May 2008 - seems to have run its course. Rice output The US Department of Agriculture, in its latest May 12 outlook update, has projected global rice output for 2010-11 at an all-time-high of 459.74 mt. Global ending stocks for 2010-11, at 96.6 mt, and stocks-to-use ratio, at 21.3 per cent, are both slated to touch their highest since 2002-03. The agency has forecast record production this year for Thailand (20.60 mt), Vietnam (24.75 mt), Myanmar (11 mt), Indonesia (40 mt), Bangladesh (32.3 mt), Philippines (10.8 mt), Nigeria (3.6 mt), Iran (2.05 mt) and even the US (7.62 mt). Brazil (8.4 mt), China (137.5 mt) and Cambodia (4.95 mt), too, are poised to harvest bigger crops. The takeaway from all this is that the rice trade is re-entering a period of normalcy, if not glut. This is the case not only globally, but even in India, where publicly-held rice stocks are currently at their highest comparative levels, notwithstanding last year's production setback. Price spikes Farmers planting paddy this time are, therefore, unlikely to benefit from any price spikes (unless, of course, there is a repeat of last year's disastrous monsoon). Even a lifting of the ban on non-basmati exports may not help in the face of ample supplies from Thailand, Vietnam, Pakistan and the US. Bulk of the crop – a third or more – would, then, end up in Government godowns.