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Mon 11 Aug 2008 01:49 AM

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UAE rice shortage likely to ease in October

Benchmark Thai rice has fallen by about a third after record highs in April.

A rice shortage in the United Arab Emirates due to international export curbs is likely to ease in October when producers replenish stocks and boost supplies, traders said on Sunday.

But UAE consumers - for whom rice is a major food staple along with bread - will continue to feel the pinch as most available stocks were bought when prices nearly trebled earlier this year after export curbs by countries from India to Vietnam.

"Maybe by the end of the year, you will see prices at the local market easing, when the new stocks get out the warehouses into the local market," one dealer said.

The Gulf Arab countries and neighbouring states have found difficulties in importing rice this year after some key producers including major regional exporter Egypt placed restrictions on exports to ease domestic inflationary pressure.

"Unlike what we thought earlier, the rice shortage did not ease in August, and it is likely to persist until the end of September," one Gulf rice importer said.

"But the market is getting less tight and prices are easing, which is good news for importers here," he told newswire Reuters. Gulf Arab consumers traditionally prefer long-grain Thai, Indian and Pakistani rice.

Benchmark Thai rice prices have already fallen by about a third after surging nearly three-fold to a record high in April, and news of Bangkok stepping into the market to meet demand from two of the world's top importers is likely to knock them further.

But unlike many other crops that take a year or more to show the results of expansion, rice farmers can fit a third crop into their normal two-cycle year.

In 2007, the UAE imported 1.69 million tonnes of rice mainly from India, Pakistan, Thailand and Egypt - up 42 percent from the previous year, traders said. It re-exported 300 tonnes of rice to the region, a 23 percent rise from 2006, they said.

"Asia sellers have indicated that they will increase exports soon, and it will take a month or two before this takes place," a Dubai importer said.

"But I'm afraid the shortage in the market will reach its peak during [Islam's holy month of] Ramadan, then things will get much better," he told Reuters.

Food consumption levels usually rise during Ramadan, when many Muslims in the region host lavish banquets to break all-day fasting. The lunar month is expected coincide with September this year.

Gulf Arab countries rely heavily on food imports, leaving them vulnerable to price changes on the international markets. (Reuters)

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