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18 Nov 2005

Agriculture

Rice Market Outlook in 2006: Rising Output ... Worrisome Trade

The rice market in 2006 is likely to be different from this year. Globally, rice production is set to increase due to pickups in rice output from the world's key rice-producing countries that were previously affected by unfavorable climate conditions. Of particular note is the rice production of China and Vietnam which has soared steadily. This is particularly true of the Chinese paddy production that exhibited leapfrogging growth in 2004/05 to 180.5 million tons, an increase of 11.2 percent, over-year. Looking ahead, rice production on the Mainland in 2005/06 is poised to keep rising. As a result, the country is likely to reduce its imports of rice and encourage its citizens to consume the locally-grown produce. Meanwhile, Thailand's paddy output in 2005/06 is expected to rise to 27.0 million tons, representing a year-on-year increase of 13.0 percent. The historical increase in rice production can be attributed to higher prices of rice that will encourage farmers to expand their rice cultivation and ample water supply, without late arrival of rain as in 2004/05.

Rice trade in the global market is projected to drop because many countries are expanding their local rice production volume, resulting in lower demand for rice import. Therefore, rice producers and traders in 2006 will have to fight for the market harder than in 2005, which leads to the forecast that the prices of rice in the global market will be weaker. For Thailand's rice exports in 2006, it is forecasted that the export volume should be higher than 2005, but the export value may increase only slightly, which is a result of export prices that are expected to drop compared with 2005 as Thailand has to face tougher competition from Vietnam, India and the US. It means that, in 2006, there will be more serious price competition, or the market will belong to buyers as rice buying countries can choose to buy rice from many sources and so have strong bargaining power. The main targets for Thailand's rice trading in 2006 should be to recover those parts of the market share that it lost in 2005, and to make greater efforts to penetrate and expand export markets, particularly in the Oceania region.

Paddy output in key rice-producing sources
: Million Tons
2003/04
2004/051
2005/062
Asia
532.6
546.7
555.0
-Thailand
27.2
23.9
27.0
-Vietnam
34.5
36.1
37.0
-Bangladesh
39.3
38.0
39.8
-China
162.3
180.5
181.6
-India
132.4
128.0
129.0
-Pakistan
7.3
7.5
7.5
-Indonesia
52.1
54.1
53.0
-Others
77.5
78.6
80.1
Africa
18.2
19.1
19.9
US
9.1
10.5
10.4
Others
26.2
29.7
30.0
World
586.1
606.0
615.3

Source : FAO. Food Outlook, September 2005.

Remarks : 1/estimate 2/projection



Volume and export value of Thai rice
Volume : million ton
Value : Million USD
2002
2003
2004
Jan-Sept2004
Jan-Sept2005
Volume
Value
Volume
Value
Volume
Value
Volume
Value
Volume
Value
Asia
2.36
575.4
2.68
691.3
2.58
803.8
1.85
569.7
1.36
489.7
Middle East
1.22
246.7
1.17
282.0
1.61
416.3
1.20
314.8
0.84
266.3
Europe
0.35
87.8
0.34
110.5
0.44
174.4
0.33
128.5
0.25
98.2
Africa
2.86
570.6
2.62
481.9
4.76
988.2
3.34
687.0
2.66
692.9
The US
0.37
125.4
0.70
227.6
0.61
232.5
0.46
177.2
0.27
130.9
Oceania
0.08
25.8
0.09
40.6
0.13
78.4
0.09
49.6
0.10
70.8
Total
7.25
1,631.7
7.60
1,833.9
10.14
2,693.6
7.28
1,926.2
5.47
1,748.8

Source : The rice export volume, Thailand Chamber of Commerce

The rice export value; the Minister of Commerce

Agriculture