Southward journey for rice begins

As the bull-run in several commodities is taking a backseat, the trend in rice prices seems to be no different.
From 255 points in February 2011, the FAO rice price index began a southward journey to 244 points in April 2011.
Despite a worsened rice production outlook in India, world rice production in 2010/11 is expected to inch up about 2.4 percent from the 2009/10 levels to 466 million tons.
The better outlook has been helped by improved supplies from North America and Asia, particularly Thailand, the largest shipper. "There is enough production in the world to keep prices down," Concepcion Calpe, a senior economist at the UN FAO, said in an e-mail interview to Bloomberg.
And rice prices indeed, appear to be paying heed to the economists comments, as is obvious from the downward momentum in the FAOs rice price index.
The next year appears more promising to the FAO, with paddy production seen rising to 480 million tons. Improved output from Asian countries is again believed to lead the rise in production, with output from Pakistan expected to be better as the countrys agricultural economy reels back from the flood disaster.
But while rice consumers may rejoice in anticipation of lower prices in the days to come, exporters at home in Pakistan may not share their joy.
Exporters enjoyed the rally in rice prices in the past few months, with the per unit price of rice exports rising remarkably (see graph), bringing more revenues home. However, with world production levels rising and prices coming down, the scenario might not be as rosy.
Yet, in quantitative terms the exports are likely to increase in FY12 in contrast to the previous year. Pakistans FY11 exports of rice were much affected by the floods - falling 16 percent during July-February FY11 to 2.38 million tons versus the same period last year - though the price rally provided some cushion in value terms.
With a better output expected in the wake of post-flood recovery, FY12 will likely be a better year for rice exports, though ebbing rice prices may become reason for dampening the delight in terms of the value of rice exports.