Supunnabul Suwannakij Bangkok
Rice stockpiles in Thailand, once the biggest exporter, are expanding to a record as a government programme to buy output spurs farmers to plant the most on record and add to a global glut.
Thai reserves will increase 24 percent to 15.5 million tons in the 2013/14 season as global output rises 1.7 percent to an all-time high of 476.8 million tons, the US Department of Agriculture (USDA) estimates. The price of Thailand’s benchmark rice will drop 12 percent to $390 (R3 868) a ton by April next year, a five-year low, traders and analysts estimate.
Thailand has spent $21.6 billion since October 2011 buying at above-market prices to shore up growers’ incomes, creating a stockpile large enough to meet annual demand from the eight biggest importers and still have grain to spare. The global supply of rice is expanding just as farmers reap record amounts of everything from maize to wheat, driving global food costs to a three-year low.
“I’ve rented more land, expanding farms by more than double, to reap the benefit of good prices from selling paddy to the government,” said Uthai Thongsaensuk, a farmer in the province of Udon Thani.
Thai rice prices have fallen 24 percent to $445 a ton this year as the Standard & Poor’s GSCI agriculture index of eight crops has fallen 17 percent, heading for its worst year since 2008.
Thailand will spend 270 billion baht (R85.4bn) buying rice from the harvest that started this month, reversing an earlier plan to cut prices after farmers threatened to protest.
Stockpiles in India, Vietnam, Thailand, the US and Pakistan, the five largest shippers, would grow 6.8 percent to a record 42.6 million tons in 2013/14, said International Grains Council (IGC) economist Darren Cooper.
Global stocks will rise 4.8 percent to 183 million tons, growing for a ninth year, the UN Food and Agriculture Organisation (FAO) predicts.
Purchases by China, the top grower and importer, may help curb the price slump. The IGC forecasts output will fall 1.1 percent to 141.4 million tons after heat waves earlier this year in China. Imports will rise 6.3 percent to 3.4 million tons in 2013/14, USDA data show.
The harvest in Vietnam, the second-largest exporter, may dip next year for the first time in more than a decade as the government encourages farmers to switch to other crops.
Production in the US, the fourth-biggest exporter, will fall 7.8 percent to 5.9 million tons after farmers sowed fewer acres, according to the IGC.
Global imports would fall this year for the first time since 2009 because of weaker demand from some African and Asian buyers, the FAO said.
Thailand’s 30-year reign as the biggest exporter ended last year as shipments dropped 35 percent to 6.9 million tons, USDA data show. Grain from the country was more expensive than Vietnam and India.
The Thai government was under pressure to accelerate stockpile sales and push more supply onto the world market, Thai Rice Exporters Association honourary president Chookiat Ophaswongse said.
The rice programme heightens risks for Thailand’s goal to balance its budget by 2017, Moody’s Investors Service said last month. Spending on rice is equivalent to about 13 percent of the budget in this fiscal year.
The country’s 15.5 million-ton stockpile would be sufficient to cover annual imports by China, Nigeria, Iran and the next five biggest buyers in 2013-2014, according to data compiled by Bloomberg from USDA estimates.
China agreed to buy 1 million tons a year from Thailand under government-to-government purchases, Prime Minister Yingluck Shinawatra said on Sunday.
Global food prices tracked by the FAO declined for a fifth month in September to the lowest level in three years on prospects for record global harvests.
Cereal prices dropped 21 percent this year, beating declines in all other categories including oils, sugar, meats and dairy products, the group says. The global corn crop will climb by 11 percent to 956.5 million tons as the wheat harvest expands 8.2 percent to 708.9 million tons, the USDA forecasts.
An estimated 842 million people suffer from chronic hunger, or about one in eight of the global population, the FAO and other UN agencies said in report this month. – Bloomberg