Rice, rubber to feel impact of El Nino dry spell

Reuters

Posted at Feb 04 2010 07:08 PM | Updated as of Feb 05 2010 03:08 AM

BANGKOK - Rice crops in key producer nations will be damaged by a drier growing season in Southeast Asia this year due to the El Nino weather pattern and rubber cultivation expansion in some countries will be delayed, officials say.

Thailand's Meteorological Department, and other regional weather experts, have warned the El Nino could bring a long dry season with lower rainfall and higher temperatures than usual.

But damage would be limited, said Apichart Jongsakul, secretary general of Thailand's Office of Agricultural Economy.

"We haven't finished our final official forecast, but I expect only a 10% drop at the worst for the main rice crop," Apichart said.

That indicated Thailand could produce around 20.7 million tons of paddy rice in its main crop, down from around 23 million normally. It generally produces about 30 million to 31 million tons a year and exports 8 million to 10 million.

The most serious effect may be felt in the Philippines, the world's biggest rice importer, which is expected to lose more than 800,000 tons of paddy rice this year, around 5% of its 2009 production of 16.26 million tons.

That means Manila will need to import more, expecting to buy a record 2.4 million tons this year.

In Vietnam, the second-biggest rice exporter after Thailand since India banned exports in 2007, the government does not expect a big impact from El Nino, officials said.

The Agriculture Ministry has not revised its projection for paddy output this year, putting it at 39 million tons, marginally lower than 38.89 million harvested in 2009.

Malaysia, the world's ninth-biggest rice importer, also expected steady rice output this year, industry officials said.

Its 2010 production would be around 1.7 million tons, roughly the same as the previous year and around three-quarters of annual consumption of 2.2 million tons. That means annual rice imports should stay at around 500,000 tons.

Indonesia, one of 2007's top rice importers, is officially forecasting a rise in rice production this year, and Ati Wasiati Hamid, director for Food Crop Protection at the Agriculture Ministry, said that meant it would need no imports.

She said the government was confident of achieving 66 million tons of unmilled rice this year against 63 million in 2009. Traders are sceptical it can hit that target, regardless of the El Nino effect.

El Nino is an abnormal warming of waters in the equatorial Pacific, which causes havoc in weather patterns, especially in the Asia-Pacific region. The U.S. National Weather Service says the present El Nino may persist until June.

Steady rubber output

Several countries have expanded areas planted to rubber after a rise in prices in 2004 and some, like Malaysia, had expected to push up 2010 production, but the El Nino may make them wait a bit longer.

Thailand is the world's top producer and exporter of rubber.

Its agriculture ministry had expected output to increase from the normal production of 3.0 million to 3.1 million tons as it has encouraged farmers to shift into rubber in recent years.

But traders and industry officials say it could be hit by a long dry season in the middle of the year that would keep output steady at last year's level of 2.9 million tons.

"Falls in production would probably be of the same order as last year when we were hit by unseasonable rains," said a senior agriculture ministry official, who declined to be named as the ministry had not yet revised its official forecast.

In Indonesia, the second-biggest producer, operators say it is too early to revise forecasts.

"We are facing abnormal weather conditions. Let's see how it affects production," said Asril Sutan Amir, chairman of the Indonesian Rubber Association.

In December, he forecast 2010 output would rise 5% to 2.5 million tons, below the Agriculture Ministry's December forecast of 2.86 million. Indonesia produced 2.59 million in 2009.

Malaysia is the world's third-biggest producer of rubber.

In December the commodities minister forecast 2010 output between 950,000 and 1 million tons.

"It looks like we may not reach our projected 1 million tons this year if this abnormal weather persists," said a government official who declined to be named. He thought 800,000-900,000 tons was more likely, depending on the severity of the El Nino.