July 20 (Bloomberg) -- The rice harvest in India, the world’s second-biggest producer, is set to drop from an all-time high as the weakest monsoon in three years slows planting, potentially boosting global prices. Futures climbed for the first time in four days.
“It will be difficult to match last year’s record rice production,” said Samarendu Mohanty, a senior economist at the International Rice Research Institute in Manila. Output was 104.3 million tons in the year ended June 30.
A 22 percent shortfall in monsoon rains delayed sowing of crops from rice to cotton, stoking a rally in commodity prices and threatening to accelerate India’s inflation that exceeded 7 percent for a fifth straight month in June. Dry weather from the U.S. to Australia has parched fields, pushing up corn, wheat and soybean prices on concern global supplies will be curbed. Costly rice, staple for half the world, may increase global food prices forecast by the United Nations to advance this month.
“The whole grains complex of wheat, corns, soybeans are forcing rice prices higher as well,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity- markets newsletter in Sydney. “Indian production is very important for the market.”
Rice planting in India dropped 10 percent to 14.5 million hectares (35.8 million acres) this year from 16.1 million hectares a year earlier, the farm ministry said today. The country is estimated to export 8 million tons of rice in 2011-2012, according to the U.S. Department of Agriculture, accounting for about 25 percent of the global trade.
World grain production will be lower in 2012 than expected a month ago, the United Nations’ Food & Agriculture Organization said July 5. Farmers across the world will harvest 2.4 billion tons of grain this year, 23 million tons less than forecast on June 7, it said. A drop in the Indian harvest “will have an impact on global prices” this year, Mohanty said in an e-mail.
Rice for September delivery rose 1 percent to $15.65 per 100 pounds on the Chicago Board of Trade by 4:50 p.m. in Mumbai. Futures, which reached a two-month high of $15.765 on July 16, have advanced 5.3 percent this year.
A smaller Indian crop and potential curbs on exports may help Thailand, the world’s biggest shipper, boost sales, rice institute’s Mohanty said.
Thailand’s government has bought 9.5 million tons of unmilled rice from farmers between March 1 and July 9 under a state purchase program, the ministry of commerce said July 10.