Posts Tagged ‘Philippines’
Ten reliable rice years

The AMIS prices panel as we find it in 2014 January. Weekly international rice prices (top) are for Thai rice, which have been on a plateau from 2012 Jan to around 2013 April, after which they declined. Rice futures prices (60-day average) have also been on a very gentle upward slope (middle) since 2012 Jan after pronounced swings to that point from 2010 Jan. Rice price volatility was dampened during the last quarter of 2011 until third quarter 2013 (compared to the previous two years) and has moved slowly lower over three years (bottom). Charts: FAO-AMIS
International grains traders rarely consider the historicity of what they deal with day in and day out. Wheat up today, maize down tomorrow, soy futures worth considering for next month, milk powder positions to be liquidated, and so on. Hold what you can profit from only so long as there is profit to be made, and futures are nothing but bets you’ve studied carefully.
But even for the hard-boiled traders, the last decade of rice has made them turn to look back and consider the curiosities of the market. Inventories of rice, all over the world, have been growing slowly and steadily for close to a decade. Now that trend, which since 2003 has been one of the longest unbroken trends in world agriculture, is ending. The change is being attributed, in the commodity exchanges and grain trading floors, to what is called a ‘downgrade’ of supplies of rice in India by the International Grains Council.
The first such forecast decline in world rice stocks, of about one million tons, means that the IGC is estimating world rice inventories at the close of 2013-14 to be 108 million tons. The curious aspect is that India is expecting a bumper rice harvest for 2013-14, and although IGC says world inventories will drop slightly (the end of the trend), there is also a reduced estimate for world consumption of rice, which is another curiosity.
According to the traders Thailand, the top rice exporter for years, has been stockpiling rice “at prices some 40%-50% above the market” and thereby prompting credit rating agencies like Moody’s to claim that the cost of the Thai programme was “threatening the country’s sovereign debt rating”.
This is plain rubbish. Traders and commodity exchanges do not grow rice to feed their families and sell if there is a small surplus to sell. The finance bots in predatory agencies like Standard and Poor’s, Moody’s and Fitch – considered the three largest by the scale of their work – don’t know the difference between a cauliflower and millet and can grow neither. Thai, Indian and African small farmers could not care less whether credit rating agencies exist and our governments should learn what true sovereignty means from our small farmers.

The FAO and IGC food price indexes and their sub-indices. For FAO the chart shows the FAO Food price Index and the cereals, oils and fats and dairy sub-indices over the last five years. For IGC the lower chart shows the IGC Grains and Oilseeds Index, also over the last five years, with the wheat, maize and rice sub-indices. The IGC rice sub-index has also recorded a plateau from 2012 January onwards with a more pronounced decline setting in from 2013 August. Charts: FAO-AMIS
The odd tale of rice was given a late twist by two cyclones. One is Cyclone Phailin which struck the eastern Indian coast in the first week of October 2013. And he other is Typhoon Haiyan, which struck the Philippines in early November 2013. Vietnam is to supply 500,000 tons of rice to the Philippines, which has sought the supplies to boost state reserves depleted by the relief operations after Typhoon Haiyan.
The FAO’s Rice Market Monitor for 2013 November said: “Although accounting for much of the worsening in the global outlook, Asia is still expected to sustain growth in world rice production in 2013. According to the latest forecasts, the region is to harvest 672.7 million tonnes (448.6 million tonnes, milled), 1.2% more than in 2012. Foremost among countries responsible for the increase are India, Indonesia, Thailand, Myanmar and Bangladesh. By contrast, drought in China’s central and eastern provinces exacted a heavy toll on the intermediate and late rice crops, which may bring about the first production decline in the country since 2003.”
I find the FAO Rice Market Monitor more detailed than what the IGC puts out (although IGC’s public offerings are but a distillation of what subscribers to the information service obtain). The FAO Monitor has also added that given a poor delivery record so far, Thailand appears unlikely to boost its exports beyond the relatively low level of last year. And that expectations have improved for India, which may replicate the 2012 record performance, with Australia, Cambodia, China (Mainland), Egypt, Pakistan, Paraguay and the USA also forecast to export more.
Grains market report, 2011 April – IGC highlights volatile trading
The International Grains Council has released its grain market report for 2011 April. Here are the salient points and outlooks for wheat, rice and maize.
The past month was again volatile in global markets, with a sharp jump in grain values in early April largely centred on renewed bullish trading in maize (corn), partly in response to new US data indicating heavier than anticipated domestic use. However, there was also general nervousness about world weather conditions for upcoming northern hemisphere harvests, while developments in other commodities, energy markets and global economic news played a role too.
Day-to-day volatility in futures exchanges remained very high, with the average “historical volatility” percentage (HV20) for nearby US CME corn in Chicago showing a further increase since March. International wheat prices registered net gains of some $30 per ton, reflecting a generally tight market for milling wheat, especially premium varieties, with concerns about the impact of dry conditions on the next US Hard Red Winter crop and overly wet weather on spring wheat plantings.
There were also uncertainties about the future relaxation of export controls in the Black Sea region. US nearby maize futures climbed to all-time highs in early April, when the latest quarterly stocks data, indicating much higher than anticipated use, eclipsed the slightly bearish US planting forecast, reigniting worries about the likely low level of pipeline stocks. Heavy US export sales activity and continued speculation about purchases by China added further to the bullish market sentiment. [Get the IGC index data file here.]
In contrast, prices of oilseeds showed little net change in the past month, with new-crop soyabeans from South America beginning to enter the market, offsetting concerns about the tighter supply outlook in the US. Global rice prices actually moved lower in the face of improved supplies from recent Asian exporter crops. Despite strong global demand for commodities and raw materials, and rising bunker fuel prices, dry bulk ocean freight rates fell significantly due to a continuing build-up of surplus tonnage.
WHEAT: Less than ideal conditions for some crops lower the projection of world wheat production in 2011-12 by 1m. tons, to 672m., but this is still 22m. more than the year before. Winter wheat in the US has been affected by dry conditions and rains are also needed in the EU and China. Spring wheat sowing is being hindered by wet soils in the US, Canada and Russia. This year’s bigger global harvest is expected to be matched by higher consumption: the world total is placed slightly above last month’s, at 672m. tons. World stocks are projected to remain steady, at 186m. tons. World trade will be lifted by larger milling imports in North Africa and Near East Asia as well as by anticipated strong global demand for competitively-priced wheat for feed. Shipments in 2011-12 are forecast at 126m. tons (122m.).
MAIZE: High prices are forecast to boost world plantings by 3% in 2011-12. Assuming yield growth returns to trend, global production is projected to increase by almost 5%, to a record 847m. tons. Potentially tight supplies and firm market prices are expected to limit consumption growth to 1.3%. Although meat demand will remain firm in number of developing countries, overall growth in maize use will likely slow, as livestock producers switch to wheat. Due to a projected standstill in demand from US ethanol producers, global industrial use of maize is forecast to slow to only 1.3%. A larger crop in the EU and increased competition from feed grade wheat is projected to result in 1% drop in world trade, to 94m. tons.
RICE: World rice production in 2010-11 is placed at a record 450m. tons. Ample availabilities will underpin rice consumption, set to expand by 2%, to 448m. tons, while the 2010-11 carryover is expected to reach an eight-year peak of 96.5m. tons (94.0m.). After last year’s solid rise, world trade is forecast to decrease by 2%, to 30.3m. tons reflecting a likely steep fall in imports by the Philippines.
Asia worries about food stocks and prices

Protesters scramble for food and drink being distributed during mass demonstrations at Cairo's Tahrir Square in early February. Photo: Reuters/RFERL
Bangladesh, South Asia’s biggest rice buyer, is in talks with India to buy grains on a regular basis to bolster food security as governments seek to avoid a repeat of the unrest that broke out when prices last soared, reported Bloomberg.
A long-term agreement will protect Bangladesh from possible defaults by private traders, who sometimes fail to meet their commitments if prices gain, Muhammad Abdur Razzaque, the nation’s food minister, said in an interview yesterday. “Rice prices rose this year in our country; people are suffering as they have limited income,” Razzaque said by phone from Dhaka.
Bangladesh’s plan underscores a drive by governments to strengthen their reserves to help manage the impact of food prices that advanced to a record last month, beating the jump in 2008 that spawned riots from Haiti to Egypt. This year’s surge has driven millions into extreme poverty, according to the World Bank, and contributed to unrest in the Middle East and Africa. “When we go for international tenders and prices suddenly rise, private suppliers sometimes fail to fulfill their commitments,” Razzaque said. “They don’t supply us and put us in trouble. It has happened.”
In the Philippines, Sen. Francis Pangilinan, chairman of the Senate committee on agriculture, has called on the country’s Department of Agriculture (DA) and the Department of Trade and Industry (DTI) to start preparing for the worst-case scenario as far as the prices of oil and other basic commodities are concerned in response to the volatile situation in the Middle East.
The Philippine Star quoted Pangilinan as having said that other nations have started preparing for an expected food and oil shortage, not only because of the turmoil in the Middle East but also because of the erratic weather patterns that the world has been experiencing. “Some Asian governments have already started to come up with measures to mitigate rising prices. Erratic weather patterns have started wreaking havoc on our agricultural lands. China and India are stockpiling on grains, which means we need to rely less on importation to secure our buffer. The price of oil continues to soar, it is a matter that requires our serious attention,” he said.
In today’s world of interlinked markets, a problem in one place quickly ripples out to others. Croplands in Russia, one of the world’s leading wheat producers, were devastated by fires during last summer’s record-breaking heat wave. Wheat harvests in Ukraine, also plagued by torrid weather, dropped 15 percent last year, a comment in Radio Free Europe/Radio Liberty reminded readers.
Both countries responded by introducing export bans that have exacerbated global shortages of the commodity. Partly as a result, world wheat prices doubled between June 2010 and January 2011. According to the World Bank, wheat prices have risen in the past six months by 54 percent in Kyrgyzstan, 45 percent in Bangladesh, and 33 percent in Mongolia.
In the oil-rich Caucasus republic of Azerbaijan, high prices have been sending citizens across the border into neighboring Georgia, where they are buying up meat, potatoes, onions, and apples. Nadeem Ilahi, head of an International Monetary Fund (IMF) delegation visiting Baku this week, warned that Azerbaijanis should expect overall prices to rise 10 percent in the course of this year — most of it due to the worldwide rise in the cost of food.
The global transmission of high food prices-World Bank’s February evidence
Higher global wheat prices have fed into sharp increases in domestic wheat prices in many countries, the February 2011 Food Price Watch of The World Bank has said. The transmission rate of global wheat price increases to the domestic price of wheat-related products has been high in many countries, according to the report. “For instance, between June 2010 and December 2010, the price of wheat increased by large amounts in Kyrgyzstan (54%), Bangladesh (45%), Tajikistan (37%), Mongolia (33%), Sri Lanka (31%), Azerbaijan (24%), Afghanistan (19%), Sudan (16%), and Pakistan (16%). Several of these countries have a large share of calories consumed from wheat-based products, particularly for the poor. Global food prices continue to rise, though not uniformly for all grains.”
The World Bank’s Food Price Watch is produced by the Bank’s Poverty Reduction And Equity Group, Poverty Reduction And Economic Management Network. The World Bank’s food price index rose by 15% between October 2010 and January 2011, is 29% above its level a year earlier, and only 3% below its June 2008 peak. A breakdown of the index shows that the grain price index remains 16% below its peak mainly due to relatively stable rice prices, which are significantly lower than in 2008. The increase over the last quarter is driven largely by increases in the price of sugar (20%), fats and oils (22%), wheat (20%), and maize (12%).
Maize prices have increased sharply and are affected by complex linkages with other markets. In January 2011, maize prices were about 73% higher than June 2010. These increases are due to a series of downward revisions of crop forecasts, low stocks (U.S. stocks-to-use ratio for 2010-11 is projected to be 5%, the lowest since 1995), the positive relationship between maize and wheat prices, and the use of corn for biofuels.
Ethanol production demand for corn increases as oil prices go up, with sugar-based ethanol less competitive at current sugar prices. Recent United States Department of Agriculture (USDA) estimates show the share of ethanol for fuel rising from 31% of U.S. corn output in 2008-9 to a projected 40% in 2010-11. Increased demand for high fructose corn syrup from countries such as Mexico, as they substitute away from higher priced sugar, also contributes to higher demand for corn. Prospects of easing in this market depend partly on the size of the crops in Latin America, particularly Argentina, which has been affected by unusually dry weather due to the La Nina effect, and the extent of import demand from China in 2011 as well as oil and sugar price trajectories.
Domestic rice prices have risen sharply in some countries and remained steady in others. The domestic price of rice was significantly higher in Vietnam (46%) and Burundi (41%) between June–December 2010. Indonesia (19%), Bangladesh (19%), and Pakistan (19%) have increased in line with global prices. These Asian countries are large rice consumers, especially among the poor. Rice prices have increased in Vietnam despite good domestic harvests. This is primarily due to the depreciation of the currency, which has fuelled overall inflation and expectations of higher demand from large importers and led to the minimum rice export price being raised by the Vietnamese government. Rice price increases in Sri Lanka (12%) and China (9%) have been relatively moderate in the second half of 2010, while in Cambodia and the Philippines the retail price of rice remained largely unchanged during this period.
Largest Movers in Domestic Prices, June to December 2010
Wheat
Kyrgyzstan (retail, Bishkek) 54%
Bangladesh (retail, national average) 45%
Tajikistan (retail, national average) 37%
Mongolia (retail, Ulaanbaatar) 33%
Sri Lanka (retail, Colombo) 31%
Azerbaijan (retail, national average) 24%
Afghanistan (retail, Kabul) 19%
Sudan (wholesale, Khartoum) 16%
Pakistan (retail, Lahore) 16%
Rice
Vietnam (retail, Dong Thap) 46%
Burundi (retail, Bujumbura) 41%
Bangladesh (retail, Dhaka) 19%
Pakistan (retail, Lahore) 19%
Indonesia (retail, national average) 19%
Mozambique (retail, Maputo) 14%
Beans
Burundi (retail, Bujumbura) 48%
Cameroon (retail, Yaounde) 43%
Uganda (wholesale, Kampala) 38%
Kenya (wholesale, Nairobi) 22%
Maize
Brazil (wholesale São Paulo) 56%
Argentina (wholesale, Rosario) 40%
Rwanda (wholesale, Kigali) 19%
South-east China evacuation as Typhoon Megi approaches
Xinhua is reporting that hundreds of thousands of people have been evacuated from coastal areas of south-east China in the path of Typhoon Megi. Quoting disaster relief authorities, the report says more than 150,000 people in Fujian Province had been evacuated, and 53,100 fishing boats have been recalled to port.
Megi is forecast to make landfall on the east coast in Guangdong Province around Saturday, according to the Fujian Provincial Meteorological Department. Authorities have issued a red warning, the highest of four warnings, that the typhoon could cause huge waves that could devastate coastal sea areas, including Guangdong, Fujian and the Taiwan Strait.
The red warning gives local authorities six hours to evacuate residents at risk and implement storm precautions, and order schools, shops and airports to close and all vessels to return to port. Meanwhile, the State Oceanic Administration has issued a yellow storm surge warning, which gives local authorities 12 hours to prepare for a storm, reporting that waters in Dongshan, Chongwu and other tidal stations in Fujian Province will exceed or approach the warning levels.
“The storm surge could be so devastating that buildings, docks, villages and cities could be destroyed by it,” said Bai Yiping, director of South China Sea Forecasting Center of the State Oceanic Administration. Megi could cause a “50-year storm surge” if it landed as a severe typhoon on the coastal areas in Guangdong, Bai said. Megi is the 13th typhoon and possibly the strongest to hit China this year. Southern provinces, including Hainan, Guangdong, and Fujian, are bracing for heavy rains and strong winds.
The Hong Kong Observatory said: “At 7 p.m. (21 october), Severe Typhoon Megi was estimated to be about 420 kilometres southeast of Hong Kong (near 20.2 degrees north 117.5 degrees east) and is forecast to move north at about 8 kilometres per hour gradually edging closer to the coast of eastern Guangdong.” The HK Observatory’s MTSAT-2 image above was captured at 16:01 Hong Kong Time on 21 Oct 2010 and clearly shows the immense size of Megi as it approaches the China coast.
Food production and grain trade, May 2010
This is to be a monthly posting from now on. It will for a start draw on three main sources of global analysis: the Food and Agriculture Organisation (FAO), the International Grains Council, and the US Department of Agriculture Economic Research Service. Extracts from the three major sources run below, but this is to be placed in global context by the food production and supply situation in two of our neighbours in South Asia, Nepal and Afghanistan. There is hunger and displacement in Pakistan and Sri Lanka too, and I’ll update this posting with relevant reports. Also contrast the global views with the announcement from the US Department of Agriculture, which comes at the end of the list of extracts.
[1] “Nominal prices, in US dollar terms, of staple food commodities, mainly rice and wheat, have generally declined from the 2008 peak but remain significantly above their pre-2008 food-crisis levels in several countries. The price impact on overall food consumption of the vulnerable population is still expected to be substantial. Prices of rice have been increasing in India since the second half of 2008 and currently are above their levels of a year ago 5 percent in Chennai to 42 percent in Patna.”
“Retail prices of rice have also been rising since late 2009 in Bangladesh, the Philippines, Pakistan and Myanmar. In exporting countries such as Thailand and Viet Nam, rice prices (in local currencies) have declined since January 2010 due to strong international demand. Prices of wheat in India and Pakistan have also been rising steadily since October 2008. Recent increases are attributed to concerns over the unfavourable harvests of the current 2010 Rabi season. In Afghanistan, prices of wheat have been coming down since the 2009 bumper harvest in the country.” From FAO Crop Prospects and Food Situation May 2010
[2] “The forecast of world wheat production is increased by 2m. tons, to 660m. (676m.). World wheat consumption is forecast to grow by 1%, to a record 654m. tons, unchanged from last month. The forecast of global stocks is raised by 2m. tons, to a nine-year high of 201m. (195m.), with much of the increase in China and India.”
“World rice production in 2009/10 is estimated to decline for the first time in seven years, by 1%, to 442m. tons, mostly reflecting a reduced main crop in India. At 442m. tons, rice consumption will expand by 1%, in line with the global population trend. Inventories in China are expected to rise, but those in India and the five leading exporters are forecast to decrease. World trade in calendar 2010 is projected to recover by 5%, to 29.9m. tons, underpinned by larger shipments to Far East Asian markets.” From International Grains Council Grain Market Report 2010 May
[3] “Global wheat supplies for 2010/11 are projected 2 percent higher with larger year-to-year beginning stocks more than offsetting lower expected production. Global 2010/11 wheat production is projected at 672.2 million tons, down 1 percent from 2009/10 and the third largest production on record if realized. Larger projected production in EU-27, South America, and the Middle East is more than offset by expected declines in FSU-12, North Africa, South Asia, China, Canada, and Australia.”
“Global coarse grain production for 2010/11 is projected at a record 1,129.8 million tons, up 2 percent from 2009/10. Most of the 27.4-million-ton increase in coarse grains production results from higher projected foreign corn production, up 19.9 million tons from 2009/10. Higher expected foreign corn area and rising yields combine with higher U.S. area to boost global corn production to a record 835.0 million tons, up 26.5 million from 2009/10. Corn production is projected higher year-to-year for China, Mexico, India, Russia, EU-27, Ukraine, and Canada.”
“Global 2010/11 rice production is projected at a record 459.7 million tons, up 17.6 million or 4 percent from 2009/10. World disappearance (consumption and residual) is projected at a record 453.4 million tons, up 10.9 million or 2 percent. Large crops are projected for most of Asia including record or near-record crops in Bangladesh, Burma, Cambodia, India, Indonesia, the Philippines, Thailand, and Vietnam. Additionally, large crops are forecast for the U.S., EU-27, and Nigeria.” From US Department of Agriculture, World Agricultural Supply and Demand Estimates, 11 May 2010
In Nepal, food supplies are running low in the western hills. An IRIN report from Kathmandu (21 May 2010) says: “Food security for more than 600,000 people in the western hills of Nepal is set to deteriorate, aid agencies warn. With already low agricultural production in the more food-insecure areas, inflation is exacerbating matters further. “A lot of villagers are opting for more desperate coping mechanisms,” Richard Ragan, country representative for the World Food Programme (WFP), told IRIN in Kathmandu. Many villagers are already reducing the number of meals they eat each day, cutting portions, or migrating to urban areas or India for work, he said. ‘In a desperate attempt to buy food, families are even selling their livestock and household assets and the out-migration [to Nepali cities and India] has increased already by 40 percent,’ Ragan said.”
In Afghanistan, farmers face a tough choice: wheat, fruit or saffron? An IRIN report from Kabul (20 May 2010) says: “Pointing to his flourishing wheat field in the western Afghan province of Herat, Abdullah says he regrets cultivating the crop. Wheat is very cheap,” he told IRIN, adding that he would hardly make 50,000 Afghanis (about US$1,050) from his two hectares. “I won’t be able to feed my family properly with this income.” Several farmers contacted by IRIN in Helmand, Kandahar and Balkh provinces had similar sentiments. Wheat is considered a strategic crop and a staple food, but imports are always required, even when there is a bumper harvest. About seven million (over 24 percent of the country’s estimated 27 million population) are food-insecure and many others are highly vulnerable to food price fluctuations, according to aid agencies.”
Here is the announcement from the US Department of Agriculture: “US farmers, ranchers and producers are poised to achieve $104.5 billion in sales – an $8 billion increase over last year and the second highest level in history.
- The trade surplus in agriculture is now forecast to reach $28 billion, the second highest ever achieved.
- The report comes on the heels of an historic six-month pace by U.S. agricultural exports, which shattered records with $59 billion in sales in the first half of the fiscal year and generated a 14 percent increase over the same period last year.
- U.S. agricultural exports to China grew by nearly $3 billion during the first half of the fiscal year to $10.6 billion, making China the United States’ top market for this period. In total, exports to Asia have reached record highs, led by strong increases in China and Southeast Asia. Other outstanding country and regional customers include the European Union, Turkey, and North Africa.”