October 2, 2009

Rice prices in Asia may rise in coming sessions following flood damage to crops in the wake of Typhoon Ketsana in the Philippines and Vietnam, while a further extension to a Thai government rice buying scheme will also likely push prices higher, trade participants said Friday.

 

The Philippines Department of Agriculture has raised its estimate of farm sector losses caused by Ketsana to PHP3.62 billion (US$76.9 million), of which PHP3.28 billion represents losses from rice crops, with 190,624 metric tonnes of paddy rice deemed to have been lost from 137,703 hectares affected by the typhoon.

 

The country is now bracing for a second typhoon, Parma, which is expected to make landfall as early as Saturday, officials said.

 

The brunt of Ketsana missed the Philippines main rice producing regions, but Parma is threatening the largely agricultural areas of the northern part of the main island of Luzon, the country's weather bureau said.

 

On Friday, officials said rice stockpiles are currently equivalent of 37 days of national supply.

 

"Our policy is to keep inventories at 30 days but we're above that now - we have around 37 days worth," said Agriculture Secretary, Arthur Yap.

 

"We've lost a lot of paddy but there will be no supply shortfall and I don't expect prices to rise severely. In fact, the rain will likely benefit the next harvest as dams are now full enough to irrigate an additional 15,000-20,000 hectares of land in the Central region," he said.

 

The Philippines has no plans to import more rice, Yap said.

 

In Vietnam, the world's second largest rice exporter, flooding has destroyed around 50,000 hectares of land which had mainly been planted to rice and corn, but the brunt of the storm missed the southern Mekong Delta foodbasket, officials said.

 

In Thailand, where supply is already tight ahead of the next harvest - due to begin in November - traders said prices will likely rise following news this week that the government will extend its rice intervention program, which had initially been scheduled to end in July.

 

Under the program, the government buys rice paddy directly from farmers and stores it in a stockpile which currently stands around 6 million-7 million tonnes, traders said.

 

Thai rice prices were marginally higher in the week to Friday, with 5% broken white rice offered at US$535/tonne, free on board, up around US$5.00/tonne from a week earlier, traders said.

 

In other regional grain news, a new Australian wheat export system is now fully operational following approval by the Competition & Consumer Commission.

 

Twenty two companies are now accredited for bulk wheat exports by regulator Wheat Exports Australia under the new system, which replaced a wheat export monopoly operated for decades by AWB Ltd. (AWB.AU) when it was scrapped on July 1, 2008.