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OVERVIEW

Global rice production is at a record this month, with higher production in Brazil, Burma, Colombia, Pakistan, Philippines, and Sri Lanka. Trade is also at a record, with higher imports for Bangladesh, Ghana, Indonesia, and the Philippines. Exports are raised for Brazil, Burma, India, Pakistan, and Thailand. Global stocks are up this month to the second-highest on record.

PRICES

U.S. FOB export quotes for long-grain bagged milled rice peaked this month to the highest level in 4 years, before subsiding to $590/ton. The steady increase over the past year has been reflective of the smaller crop harvested in 2017. The USDA Prospective Plantings report forecast higher intentions for planted area in the coming year, though lower than many analysts’ predictions. South American quotes slid lower with the onset of harvest. Uruguayan quotes are currently at $522/ton. Thai and Vietnamese quotes rose over the past month to $440/ton and $434/ton, respectively, on strong demand from Indonesia and the Philippines. Indian quotes remained lower at $410/ton.

Parboiled Rice Trade Hits Record on African and South Asian Demand

Parboiled rice is processed by steaming rice in the husk, thus retaining nutrients and resulting in more separated grains when cooked. Recently, it has grown in prominence and now accounts for nearly 20 percent of global trade. Global parboiled trade surged past 8 million metric tons to a new record in 2017, up by a third from the prior year. Some buyers, such as South Africa at nearly 1 million tons, have maintained their relatively steady imports. But new and renewed importers, particularly from West Africa, South Asia, and East Africa, led trade to soar to new levels.

The largest proportion of parboiled rice is destined to West Africa. Nigeria is the largest parboiled rice market in Africa, yet a weakened economy, and certain import and currency restrictions curtailed imports directly into the country beginning in 2015. Nigeria is a member of the regional Economic Community of West African States (ECOWAS), which has a common import regime. Although most other ECOWAS member states prefer regular white rice over parboiled rice, imports of the latter have surged, particularly to Benin. Indirect trade through this regional economic community and into Nigeria stepped up considerably over the past year.

South Asian buyers Bangladesh and Sri Lanka suddenly re-entered the market in 2017, having barely imported any parboiled rice in the prior year. Both had poor local harvests, so the governments tendered for emergency purchases and facilitated greater trade by the private sector. Imports in 2018 will be largely dependent upon the ability of both countries to increase harvested area and attain improved yields.

Finally, East African countries Somalia and Djibouti are relatively new importers but, combined, saw imports rise by 30 percent compared to 2016. With growing populations and essentially no domestic production, imports for this region are set to rise in 2018.

India and Thailand are the primary suppliers of parboiled rice, followed distantly by the United States and Brazil. India has dominated the market since 2012, the first full year in which its nonbasmati export ban was removed. Since mid-2014, the two main competitors’ prices have been in tight competition. Over half of Indian parboiled exports in 2017 were to West Africa, and it also dominated trade to Sri Lanka and East Africa. Thailand increased its global market share somewhat in 2017, providing stiff competition with India in the Bangladesh market and accounting for the bulk of the South African imports. U.S. exports are primarily destined for Saudi Arabia and North America. Brazil, largely focused on Western Hemisphere markets, was the only major supplier to see a slight decline in parboiled exports during 2017.

Despite the fact that Venezuela is experiencing one of the worst financial crises in its history, the Government of Venezuela continues purchasing rice. Rice production in Venezuela has been declining for the last few years, compelling the government to import more of this staple food. In fact, Venezuela has already imported more in the first quarter of 2018 than it did during the same time period in 2017 – the only difference being the suppliers.

The United States has enjoyed a large share in the Venezuela rice market over the last 10 years, averaging over 50 percent. U.S. rice competes against several other Western Hemisphere exporters in the Venezuelan market. Argentina and Guyana have been big suppliers in previous years but have recently seen their market shares diminish. Mexico suddenly became the secondlargest supplier to Venezuela in 2017. Surprisingly, its exports were milled rice, whereas the Venezuelan government typically imports more affordable paddy rice to mill domestically.

Thus far in 2018, Brazil has seized the largest market share. It exported 124,000 tons to Venezuela in the first quarter of 2018, which is roughly five times more than in all of 2017, while the United States exported only 20,000 tons, which is about one-third of the amount shipped during the same period last year. Price is a large determinant as Brazil’s rice prices averaged around $305/ton FOB, while U.S. prices averaged roughly $342/ton FOB.

FeedDinner 2019