Global rice prices to hold steady

MANILA : World rice prices should hold steady at around 600 dollars a tonne in the near term despite an Indian drought that ravaged key growing areas, according to a leading grain economist.

Global rice stocks, which rose 22 percent over two years to the end of 2009, would be drawn down to ease the production disruptions, said Samarendu Mohanty, an economist with the Philippines-based International Rice Research Institute.

However neither will prices fall dramatically, he wrote in the institute’s quarterly publication Rice Today.

“It is safe to say that the rice price is not going back to 300 dollars per tonne any time soon and is likely to remain around 600 dollars per tonne in the near term,” Mohanty wrote.

Rice prices tripled to about 1,000 dollars during the last surge between November 2007 and May 2008.

Mohanty said the Philippines, the world’s top rice importer, and India “rattled the market” again last year with large tenders to import the grain.

However India, which was in the grip of a devastating drought last year, later cancelled its tenders.

And India, along with China, Indonesia and Thailand accounted mostly for the earlier increased global rice stocks, according to Mohanty.

“(Therefore) Indians do not have to turn to imports, at least in the near term, because they have enough at their disposal,” he wrote.

Mohanty said that the extent of rice price rises would ultimately depend on how countries responded to the market hype about a perceived shortfall.

“In the larger interest of global food security, rice-importing countries should refrain from making large purchases at one time and should import in smaller volumes as need arises,” he wrote.