NEW YORK (TheStreet) -- U.S. rice exports for the week June 11-June 17 were 59,000 tons, up 5% from the prior week and 70% from the moving four-week average, according to United States Department of Agriculture (USDA). U.S. rice exports may slow down in the coming weeks on increased rice production in the top ten rice growing countries. As a result, domestic rice supply will likely increase leading to a decline in the rice prices during the second half.
For 2010-2011, global rice production will likely increase by 4% reaching a record 460 million tons. The top ten rice producers are: China, India, Indonesia, Bangladesh, Vietnam, Thailand, Myanmar, Japan, Philippines and Brazil. Governments in most of these countries incentivize rice growing by offering farmers various subsidies, encouraging boost in rice production for the current year.
A normal monsoon in India and Philippines will cheer rice growth and boost higher farm output, and brightens the prospect of these countries recovering from the past year's losses. India is likely to produce 99 million tons in 2010, against the 87.5 million tons in 2009. Rice acreage in the country is expected to expand by 16.7%. A contraction in rice acreage in Brazil and other countries will lower Latin American production by 3% from the past year's production.
In comparison to the 4% increase in production growth, consumption is anticipated to grow only by 2% to 454 million tons. Rice intake may reach 388 million tons this year, 6 million tons more than in 2009. Meanwhile, rice used as livestock feed may decline to 12 million tons and other uses may reach 53 million tons.
Rice consumption growth is above the world population growth rate, since average per capita rice consumption is expected increase by 0.5% to 125 pounds from 124.3 pounds.
Rice is a thinly traded commodity with less than 8% of production entering global trade. In comparison, 10-12% of corn, around 18% of wheat and nearly 30% of soybean enter global markets. World rice trade is expected to surge 5% to 31.3 million tons in 2010 from 29.7 million tons in 2009.
Imports to Europe and Latin America may increase on decreasing production, while imports to Africa may decline fractionally. Exports from major rice exporters such as Thailand, Vietnam, the U.S., Pakistan, China and Myanmar may shrink during the upcoming weeks on the increasing stockpiles around the world. For instance, Philippines, the world's largest rice importer, currently holds rice reserves that will suffice until the end of 2010, limiting the prospect of additional purchases.
World rice prices have been declining during the past five months. As reported on June 16, Thailand's white rice 100% grade B for export declined 22.6% to $471 per MT from $609 per MT, reported on January 13.
U.S. long-grain milled rice export prices will continue to fall on lack of fresh export demand. The U.S. is the fourth largest rice exporting nation accounting for 11-12% of world trade, although producing less than 2% of global rice.