Rice Only Asian Crop at Risk From El Nino, Meteorologist Says

Jan. 26 (Bloomberg) -- Rice is the only crop in Asia at risk of
potential damage from El Nino as the weather phenomenon, which reduces
rainfall, is likely to spare coffee, palm oil, rubber and sugarcane,
an agricultural meteorologist said.

Drier-than-normal weather has affected rice crops in Myanmar,
Thailand, northern Philippines and northern Malaysia, Bryce Anderson,
chief agricultural meteorologist at Telvent DTN Inc., an agricultural
weather news and information provider, said today.

“If there’s going to be a problem, it would be in terms of rice in
that particular region,” Anderson, who has been an agricultural
meteorologist for 30 years, said in a phone interview from Omaha,
Nebraska. “The effects of El Nino are still going to be hanging around
for a while.”

Drier weather in Malaysia and Myanmar may add to global rice supply
concerns and push prices higher after governments in Thailand, the
world’s biggest exporter, and the Philippines, the biggest importer,
warned that their production will drop this year as El Nino parches
crops, Jonathan Barratt, managing director at Commodity Broking
Services Pty., said by phone from Sydney today.

Rice production in the Philippines may drop 1.7 percent to 7.25
million metric tons in the first half as lower rainfall caused by El
Nino prompted farmers to reduce acreage, the Bureau of Agricultural
Statistics Office said Jan. 20.

“We feel that given the weather concerns, we could have a supply
issue,” Barratt said. “We’re actually thinking that rice has an
upside. We’re looking to go long rice.”

Uncertain Outlook

Rough rice futures have advanced 26 percent on the Chicago Board of
Trade from last year’s low. The export price of 100 percent grade-B
Thai white rice, the benchmark in Asia, has risen 13 percent from its
October low as the Philippines accelerated purchases after storms
destroyed at least 1.3 million tons of domestic crops. Concern that
India may become a net importer after a drought also lifted prices.

“Prospects for world rice prices in the next few months are subject to
much uncertainty,” the U.N. Food and Agricultural Organization said in
a report released last week. “A subsiding of the recent price strength
is unlikely to be witnessed before March/April when more will be known
about the size of the new crops heading to the market.”

Malaysia, the world’s sixth-largest importer, was forecast to buy
850,000 tons of rice this year, while Myanmar, Southeast Asia’s third-
largest shipper, was estimated to sell 1 million tons, the U.S.
Department of Agriculture said on Jan. 12.

Supply Interruptions

“There may be some interruption of supply,” Anderson said. “I want to
be optimistic there’s going to be some improvement as we go forward
from here,” he said, noting that El Nino did not create “complete
region-wide issues.”

During the first half of January, the temperatures in the eastern
Pacific Ocean were 1.2 degrees Celsius higher than normal, down from
1.9 degrees Celsius in December, when average temperatures were the
warmest since 2002, Anderson said, citing Telvent DTN data. El Nino is
characterized by a warming of the Pacific.

“This is a sign to us that the El Nino has reached its peak and is
probably going to decline as we head into the rest of the northern
hemisphere winter and into the spring,” Anderson said.

Apart from parts of Southeast Asia, the rest of Asia is in a
“favorable situation,” with soil moisture in some parts of northeast
China at close to 90 percent, making rice “supply conditions
manageable,” Anderson said.

“The way things are appearing, I don’t think we are going to have a
real threat to production” of coffee, palm oil, sugarcane and rubber,
he said. Those crops require less water than rice.