FAO expects rice production to rise by 1.8 percent in 2008

Market situation remains difficult in the short-term – lower rice trade

2 April 2008, Rome – World rice production is expected to increase in 2008 by 12 million tonnes or 1.8 percent, assuming normal weather conditions, FAO said today. Production increases would ease the current very tight supply situation in key rice producing countries, according to the first FAO forecast for this year. International rice trade is expected to decrease, mainly due to restrictions in main exporting countries.

Sizable production increases are expected in all the major Asian rice producing countries, especially Bangladesh, China, India, Indonesia, Myanmar, the Philippines and Thailand, where supply and demand are currently rather stretched. Governments in these countries have already announced a series of incentives to raise production.
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Well, yes and no. A 1.8% worldwide growth in rice production is certainly better than what has occurred for the last several years, but not good enough. And remember, this is just an advance prediction by FAO - it has to actually come true.

The one thing it (an actual production increase) might do is alleviate some price increases on the futures market, but not for short term deliveries.

The other issue here is that UN crop "predictions" tend to be treated as somewhat suspect, at least to players in the commodities market. The term "wishful thinking" tends to come to mind.

But, we sure can use the increased worldwide production, if it comes true.

Btw, the very recent US futures market in grains (particularly corn) is showing some interesting trends. Farmers are seeing a very, very strong market for grains up through May/June, but not so much for future deliveries past that. Why the discount? Interesting question there.