BANGKOK, THAILAND — Below normal monsoon rains in India are the chief cause of a 7.8 million tonnes downward revision in the forecast for global rice paddy production in 2012, although world output should still slightly surpass the excellent results achieved in 2011, according to the July 2012 issue of the Rice Market Monitor released by the Food and Agriculture Organization of the United Nations on Aug. 6.

Global paddy production is expected to total 724.5 million tonnes (483.1 million tonnes on a milled basis), compared with the original forecast in April of 732.3 million tonnes (488.2 million tonnes on a milled basis). The downward revision was mainly the result of a 22% lower-than-average monsoon rainfall in India through mid-July, which is likely to reduce output in the country this season. Production forecasts were also reduced for Cambodia, the Chinese Province of Taiwan, the Democratic People's Republic of Korea, the Republic of Korea and Nepal, all of which may see a production drop in 2012.

In sharp contrast with trends observed in the maize and wheat markets, rice prices have remained surprisingly stable after gaining 2% in May. Amid abundant rice supplies and stocks , the likelihood of a strong price rebound in coming months is minimal, but the future direction of rice prices remains uncertain.

Some countries are expected to register production gains, including China (Mainland), Indonesia and Thailand, along with several other countries in Asia. Production in Africa may increase by as much as 3%, while Australia's rice harvest was 32% higher than last year. Prospects are also good for the South American nations of Bolivia, Colombia, Guyana, Peru and Venezuela, but poor precipitation and shifts towards more remunerative products in Brazil, Argentina, Paraguay and Uruguay are behind a 7% drop of production in Latin America and the Caribbean as a whole.

Asia accounts for the lion's share of global rice production, and FAO is predicting the region will reap 657 million tonnes in 2012, up 0.4% from its strong 2011 performance.

Global rice trade in 2012, however, is expected to decline by 1 million tonnes to 34.2 million tonnes, largely as a result of reduced import demand from Asian countries. Thailand is expected to face a sharp decline in exports, with Argentina, Brazil, China (Mainland), Myanmar, Uruguay and Viet Nam also shipping less rice.

Global rice inventories at the close of the 2012-13 marketing years were revised upward by 200,000 tonnes to 164.5 million tonnes (milled basis). This would imply a 9 million tonne increase from the previous year and mark the eighth consecutive season of stock accumulation. Thailand needs to release its abundant stocks before the October harvest, which could impact prices.