W49 Rice Update: FAO Forecasts a 0.8% YoY Increase in Global Rice Production

FAO's Optimistic Projections, Global Grain and Rice Production Set to Increase

According to the Food and Agriculture Organization (FAO), the global grain production forecast for 2023 is 25.9 million metric tons (mmt), reflecting a 0.9% year-on-year (YoY) increase. This growth is primarily due to improved prospects for wheat and coarse grains. Furthermore, FAO has revised its projection for global rice production in the 2023/24 season, with an upward adjustment of 0.9 mmt from the estimate in Nov-23. The revised forecast anticipates a 0.8% YoY increase in global rice production, reaching 524.9 mmt during the 2023/24 season.

This adjustment is informed by official estimates from Indonesia and Tanzania, indicating that adverse weather conditions are not expected to cause as significant a decline in production as initially forecast. Additionally, the upward revisions to anticipated rice yields in the Russian Federation, the Bolivarian Republic of Venezuela, and Vietnam, coupled with increased plantings, contribute to the positive outlook for global rice production.

Rice Prices Fluctuated in India, Vietnam, and Thailand

The prices of India's 5% broken rice type RI-INBKN5-P1 saw a slight decrease in W49, with a range of USD 497 to 505 per metric ton (mt) compared to the previous week's range of USD 500 to 507/mt, as buyers paused after making substantial purchases in the earlier weeks. Additionally, the southern Indian coast was hit by Cyclone Michaung on Tuesday, December 5, disrupting the loading operations at the Kakinada port situated in Andhra Pradesh. Additionally, the cyclone affected the rice milling in the state.

Vietnam's 5% broken rice RI-VNBKN5-P1 prices remained unchanged in W49, averaging USD 655 to 665/mt. Trading activity is low due to high prices. However, traders are optimistic about the prices given the limited supplies and high domestic prices. On the other hand, Thailand's 5% broken rice prices RI-THBKN5-P1 softened slightly to USD 620 to 625/mt compared to the previous week's USD 630/mt, as demand shifted to other Southeast Asian countries. A Bangkok-based trader expects an increase in supply during the first quarter of 2024 due to the off-season demand. Despite anticipating a further price rise, rice mills are still holding back on making purchases. They expect the current price levels will remain steady until the end of 2023.

Indonesia Became the Largest Buyer of Thai Rice in 2023

From January to October this year, Indonesia became the biggest buyer of Thai rice, with an import volume of over 1 mmt, valued at USD 500 million. According to the Ministry of Commerce Statistics of Thailand, as of Oct-23, Thailand's rice export volume increased by 11.4% year YoY, reaching 6.92 mmt. The export value increased 24.7% YoY to USD 3.97 billion. The top 5 destinations for Thai rice are Indonesia, the United States, South Africa, Iran, and China.