OVERVIEW

Global production for 2015/16 is down from last month as reductions for Bangladesh, Cambodia, and the Philippines more than offset gains for South Korea, Sri Lanka and the United States.Global consumption is revised lower driven by adjustments in China, reflecting changes in diets and declining feed and industrial use. Consequently, global stocks are raised. Global trade is marginally lower. U.S. exports for 2016 are unchanged.

Mexico's Imports Shift From Rough to Milled

Traditionally, rough rice has accounted for the bulk of Mexico's imports; however, over the past 4 years, milled imports have risen as the proportion of rough imports has fallen.

In particular, a decline in domestic milling in 2011 contributed to the expansion of milled rice imports at the expense of rough. Mexico has been a key market for U.S. long-grain milled and rough rice; however, the U.S. share of Mexico's milled imports plunged from 78 percent to 39 percent, attributable to the availability of competitively priced Asian origins.

Should Mexico's appetite for milled rice persist, the United States could face heightenedcompetition from Vietnam, a major exporter and party to the Trans-Pacific Partnership agreement eligible for duty-free access after a 10 year phase-out period. Notably, in January 2015, Mexico re-introduced tariffs on rice imports from countries with which it does not have a free trade agreement – a measure from which the United States should continue to benefit.

Major Asian Quotes Converge

Export quotes for Thai 100B are slightly weaker, pressured by ongoing harvest of the main crop, which accounts for about two-thirds of national production. Thailand's recent sales of 500,000 tons to Indonesia had little impact on boosting prices. In contrast, quotes for Viet rice are up nearly $20 per ton to $375, supported by sales to the Philippines and Indonesia. Meanwhile, U.S. quotes remain elevated with a premium of nearly $200 above the Asian origins.

SELECTED TRADE CHANGES for 2016

  • Cambodia's exports are cut 200,000 tons to 800,000 on a smaller crop.
  • Cote d'Ivoire's imports are trimmed 100,000 tons to 800,000 on large carryin stocks.
  • Indonesia's imports are boosted 300,000 tons to 1.6 million to reflect recent purchases from Vietnam and Thailand.
  • Sri Lanka's imports are down 150,000 tons to 50,000 on an expected record crop.
  • Vietnam's imports are lowered 100,000 tons to 400,000 reflecting reduced supplies in Cambodia, its major supplier.