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Sun 11 May 2008 05:30 PM

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UAE rice shortages to continue until August

Output not set to rise until later in year when producer nations replenish stocks.

The UAE will continue to face a shortfall in rice supplies at least until August when consumer and producer nations replenish stocks and expected extra crops boost supplies, traders said on Sunday.

Rice output is set to rise this year as major producers plant additional crops, likely slowing or halting a rally that has caused prices to more than double since January.

"The UAE's rice shortage won't ease before August when production in countries like India and Pakistan rise, and we see more supplies in the market," an Abu Dhabi-based rice importer said.

"Of course, we will have to assume that unexpected incidents like hurricanes or floods happen in the middle and make things worse," he said.

India, the world's second-biggest rice exporter in 2007, banned all non-basmati rice shipments in March, one of a series of protectionist measures worldwide that triggered a wave of panic buying, causing benchmark Thai prices to nearly treble.

Vietnam, China and Egypt have also curbed exports.

Last year, the UAE imported about 750,000 tonnes of rice mainly from India, Pakistan, Thailand and Egypt, traders said.

"We all hope that India will resume rice exports to the Gulf again by then, and we are getting some positive responses from the Indian government," another trader said.

Last week, India's Food Secretary T. Nand Kumar told Reuters that India, which has forecast a 1.7% increase in rice output this year to 95.7 million tonnes, would soon consider selling limited volumes of the Asian staple to its neighbours or countries with which India had a "strategic interest".

Rice importers in the UAE are demanding at least a 25% subsidy for rice as international prices continue to rise and stocks come under pressure.

Food price inflation in the UAE is partly driven by the dirham's link to the dollar, which hit record lows against the euro and a basket of major currencies last week, experts and traders said.

The rising price of staples such as rice - called a "silent tsunami" by the World Food Programme - has sparked violent protests from Haiti to Somalia, and heightened fears that the world's poor may soon struggle to feed themselves.

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

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.

Global rice output is expected to reach a record 432 million tonnes, up 5 million tonnes from 2007/08, the US Agriculture Department said on Friday.

"Even if the Indian government does not ease curbs on rice exports, when the new crops hit the market, buyers will be less worried about rice supplies and we will be able to easily secure enough amounts to meet local demand," a Dubai-based trader said.

"When there is less panic in the market, suppliers are more relaxed. (Reuters)

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