Rice exports likely to increase

Following a healthy year of rice exports that accounted for nearly 11.21 percent of total export receipts last year, traders along with Trade Development Authority of Pakistan are formulating strategies to increase export volume to 3.5 - 4 million tons in current financial year from 2.9 million tons achieved last year.
Supply factors on the domestic front look favorable enough for overseas sales as growers have achieved a bumper production of rice (6.4 million tons) so far in this crop year. Add to this the carried forward stock of 1.9 million tons from last year, and leave 2.5 million tons for annual domestic consumption and we are set to have a total surplus of 5.8 million tons this year.
Although, the FAOs Rice Price Index, based on 16 export quotations, has declined by 9 percent to 237 points in the past five months due to excess global supply, it is likely to edge higher by about 5 -10 percent to 261 points (close to its last year high of 269 points) in the next six months as higher supply from Thailand and Vietnam will likely be offset by decrease in production elsewhere.
Global rice demand is increasing this year as rice output is expected to fall owing to bad weather in Asia, especially, Philippine and India, owing to which FAO forecasts that global paddy production will fall by 13 million tons to 675 million tons or 1.9 percent less than that in 2008.
Besides, Indias ban on the export of non-basmati rice will help Pakistan to increase market share in rice export market. This trend is already evident from 26 percent year-on-year surge in the export of Pakistani IRRI rice in the first five months of current fiscal, according to the food ministry spokesperson. In addition, governments support in the form of 100 percent financing facility to rice exporters would boost international sales.
These factors suggest that while international rice prices may dent export profits relative to last year, playing on sheer volumes alone and plugging the global demand-supply gap will help Pakistan earn more revenues from overseas rice sales.

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WORLD RICE MARKET AT A GLANCE (MN TONS)

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                    2008/09        2009/10

                   estimate     forecast    Change (%)

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Production            460          451           -1.9%

Trade                  30           31            2.7%

Total utilization     446          454            1.7%

Food                  383          389            1.5%

Ending stock          124          121            2.7%

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