By Kris M. Crismundo
MANILA, Aug. 15 (PNA) — The Philippine-based International Rice Research Institute (IRRI) has discussed the possible effects of El Niño in the rice market in the latter part of the year.
IRRI’s latest published Rice Today noted that the extent of rainfall disruption in El Niño-watch countries, including India, Indonesia, and the Philippines puts uncertainty to the supply of rice in the market.
●Current situation
IRRI said the market has been quite indifferent to the possible effects of strong El Niño mainly due to rice surplus and lower rice prices in the world market.
IRRI’s publication mentioned that there are nearly 100 million tons of rice stocks in the global market which include the nine million tons of rice stocks from Thailand.
“The global rice market has more or less ignored these [El Niño] predictions in the past few months because of surplus in Thailand and other key exporters,” IRRI’s Rice Today read.
“Last year’s forecast miss of a probable El Niño has also been playing in the minds of many in the rice market,” it added.
Thai rice prices declined by nearly 10 percent from USD 400 per ton in March to USD 365 per ton in June.
“But the market sentiment can change quickly as we pass through the planting season and crop growth stages of the main crop in many rice-growing countries,” IRRI noted.
●Uncertainties ahead
IRRI mentioned that the despite the current global stock is higher than the 2007-2008 period, stock-to-use ratio declined to 18.8 percent.
The stock-to-ratio indicates the carryover stock as a percentage of the total use of the commodity.
“The ratio has steadily declined in the last few years from 23.7 percent in 2011-2012,” IRRI said.
It was also mentioned that rice production in the Philippines and Thailand is expected to be lower due to El Niño-induced drought.
IRRI cited three critical situations in determining rice supply in the market from late 2015 to early 2016:
a) the rainfall in the Philippines for the next few weeks;
b) India’s monsoon situation in the next couple of months; and
c) Indonesia’s rainfall during November-December period which accounts for 95 percent of its total annual production.
“At this point, the market is poised to remain rational and driven by market fundamentals as long as exporting countries remain open for business and refrain from making unilateral decisions to restrict rice trade flows and importing countries refrain from panic buying for domestic stockpiles,” IRRI said.
“The major worry for the market is the countries in the El Niño watch, which include the second-largest exporter, India, and three large importers: Indonesia, Malaysia, and the Philippines. If these countries are affected by drought in the coming season, this could spell trouble for the market,” it added.
“If this happens, the nine million tons of Thai rice stocks could come in very handy in keeping the market in check and ensuring that importers not resort to panic buying,” IRRI said. (PNA)