SINGAPORE, April 14: A rebound in rice supply from India and Pakistan this year will calm fears over food inflation faced by poor nations as cheaper grain from the South Asian neighbours corners a third of the global market.

South Asia’s ample grain stocks will help it undercut key traditional suppliers, as a populist scheme in Thailand prices its grain out of competition and high export floor prices in Vietnam deter some buyers.

India is likely to emerge as the world’s second largest rice exporter in 2012, selling around 7 million tons, while Pakistan’s shipments are expected to bounce back to about 4 million tons amid the high prices of rival Thailand.“Indian rice supplies will act as a price stabilisation factor against high global food inflation,” said Tajinder Narang, advisor at a New Delhi-based trading company Emmsons International.

Global food prices rose in March for a third straight month with more hikes to come, the UN’s Food and Agriculture Organisation (FAO) said last week, with higher prices of oilseeds and grains contributing to the rise.

The FAO index, which measures monthly price changes for a basket of cereals, oilseeds, dairy, meat and sugar, averaged 215.9 points in March, up from 215.4 points in February.

Although the index level is below its Feb. 2011 peak of 237.9, it still exceeds the level during the 2007-08 food price crisis that triggered global alarm.

After benchmark Thai white rice prices climbed to a record above $1,050 a ton in May 2008, several nations, including India, put a ban on exports.

That left buyers scrambling for supplies, unleashing concerns over food inflation and the threat of unrest in poor nations in Africa and Asia. But high stock levels in India and Pakistan could help avert a replay this year.

Prices seen steady

Competition from India and Pakistan has kept a lid on rice prices this year.

The Thai benchmark 100 per cent B grade white rice dropped in February to its lowest since June, with prices having slid more than 5 per cent this year, while Vietnam’s 25 per cent broken rice has lost almost 8 per cent in 2012 to trade at $415 a ton.

Vietnam is seen snatching the title of world’s biggest rice exporter from Thailand this year, having set itself the aim of matching last year’s record shipments of 7.2 million tons, aided by strong demand and a positive outlook for domestic production.

Still, Vietnam faces stiff competition from India in the African market as Vietnamese rice prices have been higher, partly because the country’s food association maintains a price floor mechanism.—Reuters