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MUMBAI, Nov. 6

THE international market for rice in 2002 has been gathering momentum in recent months. World rice trade this year may touch 25.7 million tonnes, 1.7 mt higher than in 2001, according to forecast made by Food and Agriculture Organisation (FAO).

If realised, this would be the second time in history that world rice trade surpasses the 25 mt benchmark, the FAO said in its latest Rice Market Monitor, adding that the higher global trade prospects reflect, in part, an increase in expected rice purchases by Nigeria, but mostly a strengthening of import demand in Asia, concentrated among a few countries, notably Indonesia and the Philippines.

By contrast, China's anticipated rice purchases have been lowered to a level that translates to just 7.5 per cent of its tariff rate quota under the WTO agreement, the report noted.

Regarding exports in 2002, competition remains intense, with India expected to further increase its market share at the expense of traditional large exporters.

According to current estimates, India is expected to supply five million tonnes that is almost 20 per cent of the expected volume of trade in 2002 as compared with 7 per cent in 2001.

For several months, international rice quotations from different origins and qualities have been subject to divergent trends, which have offset each other in the new FAO Total Export Price Index for Rice (1998-00 = 100) keeping it unchanged at 73 points since July.

The price outlook for the short-term appears somewhat mixed, the report pointed out. On the positive side, improved global import prospects and procurement from farmers in Thailand have translated into stronger export quotations. On the negative side, however, the arrival of freshly harvested supplies in northern hemisphere countries over the next few months might have a bearish effect on prices, especially since major exporters still hold large rice inventories.

On India's rice exports, the report forecast rice deliveries to rise from 3.1 mt in 2001 to a record 5 mt in the current year. Although deterioration in production prospects for the current season is not expected to induce a major shift in the country's export policy as supplies of rice from out of stocks held by the Food Corporation of India (FCI) are still very large, some procedural changes announced recently might erode India's competitive advantage for higher quality rice.

Traders are now obliged to export a volume equivalent to at least 98 per cent of the quantity they purchased from FCI stocks at particularly low prices. Such a requirement would force those traders who processed the rice with the purpose of reducing the percentage of brokens to make up for the removed grains by purchasing the differential in the open market, at higher prices.

FAO's forecast of paddy production in 2002 now stands at 588 mt (393 mt milled equivalent), over 6 mt less than earlier anticipated and nearly 9 mt below last season's outcome.

As for world rice trade in 2003, forecasts are still very tentative. Current estimates put the volume of international transactions next year at 26.1 mt, 2 per cent more than in 2002, caused by higher import requirement seen for the Philippines and Nigeria.

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