London, April 17 - Rice prices should fall later this year after producers ease export curbs and top importer the Philippines stops buying, a senior economist with the International Grains Council said on Thursday.
Prices for the commodity have soared this year, buoyed by export restrictions in several major producing countries in a market where production has been slow to expand and struggled to keep pace with rising demand linked to population growth.
The benchmark Thai 100 percent grade B white rice has risen 135 percent since the start of the year, far outpacing an 18 percent climb in maize, 10 percent in gold and 9 percent in crude oil, according to IGC data up to April 11.
IGC senior economist Darren Cooper said in an interview the Philippines was expected to pay around $1,000 per tonne, cost and freight, at this week's tender and might pay an even higher price at its next tender in May.
"It will be about $1,500 to $1,600 in the next one in May I'm sure. They have to feed the population. The president's job is on the line," Cooper said.
But prices should then fall back, particularly if producers ease export restrictions in the second half of this year.
"If it buys again at its next tender in May it will be covered for this year. We won't see these excessive prices afterwards because the Philippines won't be coming back," Cooper said, adding the Asian country was expected to be easily the world's largest importer of rice this year.
"I think we will see a new equilibrium. It will certainly come down well below $1,000," he added.
Cooper said global stocks of rice had been stable for the last two or three years but had fallen sharply earlier this decade with production struggling to keep pace with demand.
LITTLE RESEARCH
"It (production) is just going up marginally because there hasn't been the investment in agricultural research in some of the countries in Asia and populations keep expanding," he said.
"The technology isn't there to improve rice production and the land isn't there," Cooper added.
He said there was concern that as population growth continued there could be a serious shortage in the future.
"There seems to be this panic setting in now. Probably the key factor putting up prices is the export restrictions," he said, adding India was the first to impose a minimum export price last year.
Cooper said several other producers has since also imposed export curbs, leaving Thailand, which accounts for about one-third of world exports, in an "extremely strong position".
"I think it (export curbs) is just a bug at the moment to counter inflationary pressures," he said, referring to the concern about food inflation which has swept across exporting countries, prompting moves to dampen domestic prices.
European Union Trade Commission Peter Mandelson said on Thursday developing countries risked causing a "spiral of protectionism" and aggravating food shortages when they try to combat soaring prices by blocking their own exports.
"At some point they (exporters) will have to ease. We think the export restrictions will be eased sometime this year, possibly in the second half," Cooper added.
Cooper said market tightness had also been exacerbated by farmers holding on to supplies in expectation that prices will climb further.
"There are farmers and stockholders sitting on rice, especially in the Asian countries," he said.