Flooding Hurting Philippine Rice Supply

Rice Supplies Tighten as Flooding Hurt Harvests in Thailand, Philippines

Thailand, the world’s biggest rice exporter, said that output will drop because of flooding, while the Philippines, the largest buyer, said its harvest may miss a target, potentially raising import demand. Futures surged.

Main-crop, rough-rice output may decline 3.9 percent to 22.34 million metric tons, while second-crop production may gain 0.9 percent to 8.33 million tons, according to a statement from Thailand’s Ministry of Agriculture and Cooperatives today. The total harvest may drop to 30.67 million tons from last year’s 31.5 million, according to Bloomberg calculations.

The Philippines may miss a rice-production goal of 16.24 million tons this year after flooding caused by typhoons, Agriculture Secretary Proceso Alcala told reporters today. The government will probably decide by the first week of December how much rice it will import, Alcala said.

The developments add to signs that wetter-than-usual weather is harming Southeast Asian rice harvests, contributing to a rally in prices and rising food costs. World food prices climbed to the highest level in more than two years in October on more expensive cereals, cooking oils and sugar, the United Nations’ Food and Agriculture Organization has said.

‘Crop Losses’

“Crop losses in Thailand raise concerns supplies will be tightened during November to January as floods will likely delay crop availability onto the market until February,” said Kiattisak Kanlayasirivat, a director at Novel Commodities SA’s Thai office, which trades about $600 million of rice a year.

Rough rice for January delivery gained for a sixth day today, advancing as much as 2 percent to $15.55 per 100 pounds on the Chicago Board of Trade. That’s the highest price since last December.

A La Nina weather event has brought heavier-than-usual rainfall to parts of Asia this year, damaging rice crops in the Philippines, Thailand and Vietnam. The rice crop in the U.S., the fourth-largest shipper, has also been hurt by dry weather, while Pakistan’s rice crop was hit by floods last year.

The U.S. Department of Agriculture cut its estimate for global milled rice output to 452.5 million tons on Oct. 8, 171,000 tons short of forecast demand. The global deficit, the first in four years, may be wider as typhoons and flooding hit Southeast Asia days after the USDA released that estimate.

Lower Forecast

Global milled output may be 450 million tons in the 2010- 2011 season, 10 million tons less than previously forecast, Samarendu Mohanty, a senior economist at the International Rice Research Institute, said today. The revision came after the floods in Southeast Asia, as well as drought in parts of China, Mohanty said in an interview.

The “supply situation is definitely very tight this year and next year,” Mohanty said from Hanoi, where he’s attending a conference. Other food prices have also risen, including wheat and corn, Mohanty said.

Thai rice-export prices, the benchmark for Asia, may advance to $550 a ton, said Kiattisak at Novel Commodities. The price of 100 percent grade-B white rice rose to $521 a ton on Nov. 3, the highest level since March 31. Prices are set weekly.

About 7.56 million rai (2.99 million acres) of rice lands - - about 11 percent of Thailand’s total -- are estimated to have been damaged in the floods, the ministry’s statement said. Thailand’s crop year runs from late October, with the main crop contributing most production.

The Thai floods spread to 51 provinces over the past month, leaving 165 dead and affecting at least 7.6 million residents, according to the Department of Disaster Prevention and Mitigation. The La Nina will intensify around the end of the year, Thailand’s Meteorological Department has said.

Vietnam, the world’s second-largest rice exporter, will focus on keeping the amount of land devoted to the crop stable, Prime Minister Nguyen Tan Dung said at the conference in Hanoi.

The nation’s rice shipments totaled 5.7 million tons in the January-to-October period, a 5.8 percent increase from a year earlier, according to the General Statistics Office in Hanoi.

By Bloomberg


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