SINGAPORE: Asia's rice output is set to climb this year as higher prices spur farmers to expand acreage and use more fertiliser, easing supply concerns after production suffered its first decline in seven years in 2022.
Production from recently harvested off-season rice crops in India and Thailand, the world's top two exporters, has exceeded last year's levels, and farmers are gearing up for main crops to be planted in coming months, with prices hovering near two-year highs.
Major northern hemisphere producers, including India, Pakistan and Thailand, will start planting their main crops in May and June, said Shirley Mustafa, an economist at United Nations' (UN) Food and Agriculture Organisation (FAO).
A greater area will be planted with rice "in response to increases in rice prices, and greater access to fertilisers could sustain an output expansion from these crops," Mustafa said.
India's export restrictions last year, combined with lower global production after a heatwave in China and floods in Pakistan, lifted prices of the staple, deepening worries over food inflation.
However, prices have declined in recent weeks, with the widely used 5% broken rice variety in India RI-INBKN5-P1, the world's largest rice producer, and Thailand RI-THBKN5-P1 quoted well below two-year highs seen earlier in 2023.
Production from winter-sown rice in India jumped to 22.8 million tonnes from 18.5 million tonnes a year ago as above-average rainfall in September-October allowed farmers to expand. The rebound compensated for the drop in the summer-sown crop.
In Thailand, output from this year's off-season crop is expected to have risen to 5.1 million tonnes, up 24% from a year ago, according to the FAO.
"Last year, rains were very good, and reservoirs had plenty of water for irrigation," said a Bangkok-based trader at an international trading company, who declined to be named because he was not authorised to speak to the media.
Globally, the area under rice cultivation is forecast to climb to 165.70 million hectares in 2023/24, from 163.74 million hectares, according to the International Grains Council (IGC). World production is projected to climb to 521.49 million tonnes, up from 509.30 million tonnes.
"Prices are higher, and we are expecting that to encourage plantings for the 2023/24 crop, particularly in the major exporters," said Peter Clubb, a market analyst at IGC.
Rice producers, encouraged by higher grain prices and lower costs of crop nutrients, are also expected to use more fertiliser to boost yields.
Prices of fertilisers fell in the January-to-March quarter as supply from Belarus, the third-largest potash exporter, resumed and costs of key inputs, including nitrogen, fell from 2022 highs.
However, weather remains the key for Asian rice production, with some forecasters predicting an El Nino event, which brings dryness to large parts of Asia.
"As far as weather conditions go, yes, it is early and there is some concern about the impact of El Nino on rainfall in Asia," Clubb said. "Of course, the length and intensity of these weather systems will determine final conditions."
