Rice exports from Vietnam may increase 14 percent in the first quarter as the strongest El Niño in almost two decades shrivels crops in some countries, spurring importers to build reserves.
Shipments will jump to 1.3 million metric tons (MMT) in the three months ending March from 1.14 MMT a year earlier, said Tran Tuan Anh, Vietnam’s deputy minister of industry and trade. The world’s third-biggest exporter is already seeing a spurt in demand, he said in an e-mail on November 25. October rice shipments surged 43 percent to 859,000 tons from a year earlier, the highest level since July 2012, government data show.
Indonesia and the Philippines are among nations importing rice after dry weather induced by the strongest El Niño since the record event in 1997 and 1998 hurts crops. Prospects for the event to further strengthen may prompt buyers to secure supplies before prices run up as the United Nations’ Food and Agriculture Organization predicts a decline in global rice output in the 2015 and 2016 season with consumption surpassing production.
“Rice supply and stockpiles will decline, and demand for imports will rise because of unfavorable weather conditions,” Anh said. “The El Niño event occurring this year and prolonging into 2016 will affect production in many countries, especially Thailand, Indonesia and the Philippines.”
Rough-rice futures on the Chicago Board of Trade have rallied 29 percent from the lowest level in more than eight years in May on concern that the El Niño will shrink global harvest. The contract for delivery in January closed at $12.13 per 100 pounds on Wednesday.
Production in Thailand may decline to the lowest in 19 years as dry weather may prompt the world’s top exporter to further restrict plantings to preserve water supply. The Philippines is monitoring rice production closely to see whether there’s need to import more on El Niño after purchasing 750,000 tons from Vietnam and Thailand for delivery from November to March 2016.