Record Rice Crop May End Export Ban.

India, the second- largest grower, may climb as much as 7% to a record as normal monsoon rains spur planting, likely helping the country ease export curbs and potentially limiting global food costs.

“Output of monsoon-sown rice may advance to 86 million tonne in the 2011-2012 season starting June 1 from 80.4 million tonne this year,” said Tarsem Saini, president of the Federation of All India Rice Millers Association, in a phone interview from Patiala.

A record harvest may prompt India to scrap a ban on shipments, increasing world supplies and capping food costs ,UN report says. Rice surged to a record $25.07 per 100 pounds in Chicago in 2008 after nations including India, China and Vietnam curbed shipments, spurring unrest from Haiti to Egypt. Futures gained 30% in the past year.

“The key has always been the weather, and if you have a record crop, the government will re-initiate exports and you have got more on the market,” said Jonathan Barratt, managing director at Commodity Broking Services. Prices may drop as much as 14% to $13 per 100 pounds in the third quarter as the market responds to crop progress in India, said Barratt. The rough-rice contract for July delivery dropped 0.4% to $15.12 per 100 pounds on the Chicago board of trade. India banned exports of all grains except the costlier basmati variety to cool prices and bolster supplies in April 2008. The government allowed overseas sales of 150,000 tonne at a minimum price of $850 a tonne as a one-off transaction in February. State reserves totalled 27.8 million tonne on May 1, more than double the level five years ago, said FCI.

“The country has “comfortable” domestic supplies of rice, wheat and sugar and should allow exports,” farm minister Sharad Pawar said on April 20. “The government has delayed lifting the ban while it builds stockpiles to run programs giving subsidised grain to the poor in years of shortages. The country may give cash instead in future,” food minister K.V. Thomas said on May 25.“With huge stocks, far in excess of requirements, the government may allow a limited quantity for exports,” said D.P. Singh, president of the All India Grains Exporters Association.

“The global harvest this year will likely be just enough to meet demand, leaving little cushion for any losses from drought in China or monsoon problems in India,” Robert Zeigler, director- general of the International Rice Research Institute, said on May 19.

Output may be 450 million to 460 million tonne in 2011- 2012, while demand is forecast at 450 million tonne, he said.Zeigler’s forecast compares with the May 11 outlook from the USDA, which estimated the harvest at 457.858 million tonne in 2011-2012, trailing demand at 458.73 million tonne.“A good monsoon alone won’t increase the harvest because farmers make planting decisions based on prices of various competing crops,” Saini said.

Source : financialexpress.com