Exporters face record rice glut

Farmers are preparing to plant a record rice crop that will boost inventories held by the world's biggest exporters to the highest-ever.

Harvests will climb 1.2 per cent to 472 million tonnes as the five largest shippers hoard 38 million tonnes, or a year of global imports, International Grains Council data shows.

Thailand may run out of warehouse space as reserves jump 40 per cent to a record 18.2 million tonnes, according to the United Nations. Prices in Vietnam, an Asian benchmark, will drop 6.6 per cent by December to US$377.50 a tonne, the lowest level since 2010, based on the median trader estimate.

Global food supplies are rising as the worst drought in the United States since the 1930s abates and the US Department of Agriculture predicts record corn and soya bean harvests. Expanding stockpiles may help contain world food costs that have tumbled 12 per cent from a record high in 2011.

Production of rice, the staple for half the world, is set to climb to a record high for a fourth season in 2013-14 while inventories in Thailand have almost doubled in three years, IGC data shows.

Jac Luyendijk, the chief executive at Swiss Agri Trading, which handles about 600,000 tonnes a year, said: "The price outlook in the long run looks rather bleak. We have to keep in mind that with these increasing rice stocks in Thailand, the problem will become bigger and bigger. Once Thailand unloads its stockpiles, we will look to very depressed rice prices for the years to come."