A looming rice supply shortage could occur in the next few months as the poor monsoon and low rainfall in India, the world's second-biggest grower, hampers the nation's rice output, the International Food Policy Research Institute (IFPRI) said.
Floods in Queensland have brought transportation of grains by rail and road to a halt, GrainCorp Ltd (ASX:GNC), the country's largest grain handler said on Monday.
Because of the deficient monsoon, agricultural operations in India, with its resulting rice contribution to global supply, may slide to between 5 million metric tonnes and 7 million tonnes, such a dismal figure compared to the record 91.5 million tonnes a year ago, according to P.K. Joshi, director for the South Asia region of IFPRI.
With this scenario, India might be forced to curb exports, potentially affecting world prices of the basic commodity.
"A lot of importing countries looking toward India for more competitive prices are likely to shift to Thailand or Vietnam," analyst Abah Ofon said in Bloomberg News. "If we see a drop in India's rice output, it is not going to have a significant impact on global inventories. There may be slight moderation in exports."
Either that, or the Indian government may set-up a minimum level export- price when crop outlook gets clearer sometime in October, Harish Galipelli, vice president at Kochi-based JRG Wealth Management Ltd., said.
According to India's Meteorological Department, rainfall between June 1 and Aug. 13 was 15 per cent less than normal, while it forecast than monsoon rains in June to September will be be 85 per cent of a 50-year average.
The UN's Food & Agriculture Organization, in a statement earlier this month, had said global rice production is expected to reach 724.5 million tonnes versus an initial April forecast of 732.3 million tonnes.
But this was lessened because of India's poor weather conditions.
"The downward revision was mainly the result of a 22 per cent lower-than-average monsoon rainfall in India through mid-July, which is likely to reduce output in the country this season," it said.
On Aug. 6, the FAO said India's crop will slide by 9.8 million tonnes to 147.7 million tonnes of unmilled rice.
Prices of rice will likely experience a resulting uptick, despite rallying 7.4 per cent in Chicago since end May on predictions of a lower Indian crop and export curbs, Bloomberg News reported.
India contributed 252.56 million tonnes of foodgrain in 2011-12 crop year, including wheat and rice. Of the total figure, 104.32 million tonnes were rice compared from 95.98 million tonnes churned a year ago.
To contact the editor, e-mail:
Most Popular Slideshows
- Top Ten Most Peaceful Countries in the World in 2013 [SLIDESHOW]
- Kim Kardashian Baby Girl: Suggested Ways Kanye West’s New Born Can Earn Money to Keep Up with the Kardashians [PHOTOS]
- Asus Transformer Infinity Pad, Sony Vaio Duo, Toshiba Satellite, A Look at Intel's Haswell 4th Generation Ultrabooks and Notebooks [Photos]
- 'Fifty Shades of Grey' Movie Casting: Selena Gomez Open to Nude Role, Ready for Anastasia Steele? [PHOTOS]