Asia Grain Outlook on Wednesday: Rice prices likely to rise on Asia demand

 

 

Rice prices in Asia are expected to keep their upward momentum in coming sessions, supported by ongoing concerns over regional supply following adverse weather in India and the Philippines, participants said Wednesday.

 

Meanwhile, bellwether Chicago Board of Trade rice futures -- which have continued to set new highs on an almost daily basis -- will likely rise further following a U.S. Department of Agriculture supply and demand report this week which showed U.S. ending stocks at 44.2 million metric tonnes, down from 46.6 million tonnes last month.

 

The bullish tonnee in the regional market was underscored by news earlier this week that the Philippines state-owned National Food Authority could buy up to 600,000 tonnes of rice in a tender scheduled for Dec. 1, with observers citing Thailand, Vietnam, China, Pakistan, Australia and the U.S. as possible sources.

 

According to traders' estimates, the Philippines may import at least 2.35 million tonnes of the grain in 2010.

 

Participants said the NFA isn't likely to get attractive offers in its next tender, however, with the market now also focusing on the likelihood of India stepping up imports following a drought earlier in the year which hit output.

 

"NFA will not be as lucky the second time in a row as supply concerns in India are now setting the ground for price escalation in the international market," said Ajeet Kumar, a research analyst at New Delhi-based SMC Global Securities.

 

However, prices aren't likely to rise sharply from those offered at the last NFA tender as supply concerns in India are tempered by high wheat stocks, Kumar said, adding global rice prices aren't likely to rise sharply until after March next year.

 

However, prices of Thai 100% broken white rice have risen to around US$540/tonne, free on board, from around US$520/tonne at the beginning of the month.

 

Philippine paddy rice output in the third quarter rose 1.5% from a year earlier to 3.519 million tonnes due to favorable weather conditions, the Department of Agriculture said Wednesday.

 

The third-quarter output brings paddy rice production in the first nine months of the year to 10.895 million tonnes, up 2.9% on year.

 

The country's fourth-quarter production, however, is likely to fall from on year following extensive damage to rice crops from two recent typhoons.

 

Typhoons Ketsana and Parma may have reduced the country's main crop, the bulk of which is harvested in the fourth quarter, by as much as 13%, with crop losses estimated at 839,241 tonnes.

 

In other news, global 2009-10 wheat production has been revised up to 678 million metric tonnes, although the forecast's crop size is 0.5% lower on year, the U.N.'s Food and Agriculture Organization said Tuesday.

 

The organization said it increased its 2009-10 forecast by 23 million tonnes from its July figure due to better-than-expected production in Asia, North Africa and parts of Europe.

 

Meanwhile, Japan's Ministry of Agriculture, Forestry and Fisheries will issue its weekly wheat tender around 0800 GMT Wednesday.

 

The ministry usually issues its wheat tender Tuesday and concludes it Thursday, but this week the tender will open Wednesday and be concluded Friday due to a holiday in the U.S., a ministry official said.