OVERVIEW

Global production for 2015/16 is cut from last month, mostly on crop reductions for Brazil, Pakistan, and the Philippines. Trade is revised down slightly, as higher exports for India are more than offset by declines for Pakistan and Egypt, and smaller imports for Turkey. Global stocks are revised lower this month largely on a reduction for Japan (primarily due to higher consumption). The U.S. season-average farm price is lowered.

EU Imports from Cambodia, Burma and Guyana Rise Substantially

From 2012 to 2015, rice consumption in the European Union (EU) rose marginally and steadily alongside population growth. Because the region does not produce rice in large quantities, the EU relies on imports to meet domestic demand. Recently, Thailand, India, and Pakistan have accounted for the largest share of imports.

Over the past 4 years, however, an increasing proportion of imports have come from other origins. Under the Everything-But-Arms arrangement, rice imports from Cambodia and Burma gained duty free access, which expanded in 2009 due to the expiration of the quantitative limits on imported rice. Imports from Guyana doubled last year, as exporters diverted more shipments away from Venezuela and to EU. In all, EU imported a record 1.8 million tons in 2015, nearly 40 percent of which arrived from Cambodia, Burma, and Guyana. Long grain rice shipments from these sources are expected to remain strong and to account for a significant portion of the EU's imports this year.

Iraq Importing Less Long-Grain, More Basmati Rice

Although total imports have declined since 2012, basmati (fragrant) rice has accounted for an increasing share of Iraqi imports over the past 4 years. In 2015, Iraq imported 450,000 tons of basmati rice from India. Combined basmati imports from India and Pakistan comprised a mere 2 percent of Iraq's total rice imports in 2010; however, last year, Indian basmati rice alone accounted for nearly half of total imports. The majority of these basmati imports are of the sharbati variety, which is quoted at lower prices than other premium quality varieties, although higher than non-fragrant long-grain. The increase in basmati rice imports may suggest a shift in consumer preferences in Iraq, although a demand for non-fragrant rice imports remains.

Iraq was a significant market for U.S. rice, routinely receiving more than 100,000 tons annually in prior decades. Along with a small amount of private trading, Iraq administers open tenders and invites selected countries to bid for rice imports. In 2015, a U.S. supplier won a share of a tender and shipped slightly more than 60,000 tons.

U.S. Export Quotes Slide, Reducing Premium Over Competitors

This month, U.S. export quotes for bulk shipments continued to slide on weak fresh demand, falling below $450/ton for the first time since August 2015. However, U.S. quotes maintain a premium over South American and Asian sources. Uruguayan quotes slid 4 percent from the prior month with additional supplies from the new crop harvest. Thai quotes increased a marginal 2 percent to $373/ton and Vietnamese quotes climbed 5 percent to $381/ton on expected regional demand.

SELECTED TRADE CHANGES for 2016

  • Brazil's imports are raised 100,000 tons to 800,000 on higher import demand resulting from smaller crop.
  • Egypt's exports are slashed 150,000 tons to 250,000 on a newly-implemented rice export ban.
  • European Union's imports are revised up 100,000 tons to 1.6 million on stronger imports to date.
  • India's exports are raised 400,000 tons to 9.0 million on higher levels of trade to the Middle East.
  • Pakistan's exports are reduced 200,000 tons to 4.4 million on smaller exportable supplies.
  • Senegal's imports are cut 115,000 tons to 985,000 due to higher production.
  • Turkey's imports are trimmed 130,000 tons to 200,000 on lower consumption