BANGKOK - Asian countries need to build up rice stocks as global supply may shrink due to growing demand from major buyers such as China and India, which will eventually push up prices, according to global research house The Rice Trader.
"China is still not on the pace to meet (an annual purchase of) 4.5 million tonnes this year, but it will make it. The fact that it now has only 2.2 million tonnes suggests that it will buy aggressively," said Mr Jeremy Zwinger, president and CEO of the California-based research institute.
China, now the world's biggest rice buyer, imported four million tonnes of rice last year, up from 3.2 million tonnes in 2013, according to data from the United States Department of Agriculture.
The country's rice imports in 2014 set a new record for a fourth consecutive year. The dramatic increase in rice demand from the world's most populous nation began in 2007, when imports increased to more than seven times the average of the previous five years.
The Rice Trader also expects Indian rice stocks to jump to nearly 10 million tonnes this year. As of early this month, India's rice stocks had plunged by 22 per cent to 22.23 million tonnes from the previous year, according to statistics from the Food Corporation of India issued recently.
Rice Trader data from five rice-exporting countries - Thailand, India, Vietnam, Pakistan and the United States - shows that overseas shipments last year reached historically high levels at 34.67 million tonnes, up 12.4 per cent from 2013.
Mr Zwinger said that over the next several months, rice prices would stay at a low level on abundant supplies from rice-producing countries, particularly Thailand.
Within such a buyer's market, he recommended Asian countries, including China, Indonesia and the Philippines, to buy overseas, as the situation might change into a seller's market immediately, describing the current situation as a "transition" moment.
"The price now is very acceptable, especially with the risk that the oil price will go back (up), the risks of weather we keep seeing and the fact we had many years of lower production," he said during the Thai Rice Convention recently.
The market is wary of the potential of a long drought caused by the El Nino weather phenomenon which might pose a significant threat to rice production.
Australia's weather bureau has already declared the major event of El Nino, which is caused by a reversal of trade winds in the Pacific, causing ocean temperatures to rise.
Scientists have warned that the world is on track for another year of record-setting heat, with temperatures having hit a new high in the first four months of this year.
THE JAKARTA POST/ASIA NEWS NETWORK