OVERVIEW

For 2016/17, global production is forecast at a new record primarily due to a larger crop in the United States based on the NASS June Acreage report. Global trade is forecast lower, with reduced imports and consumption in Bangladesh, Iran, and Nigeria. The U.S. season-average farm price for all rice is lowered $0.40/cwt to $11.70/cwt.

For 2015/16, production is revised lower, primarily on a smaller crop in Brazil. Global trade is down due to cuts to imports for Iran, Nigeria, and Indonesia. Exports are lowered for Brazil and Vietnam. Consumption is also revised down, primarily due to reductions for China. The U.S. season-average farm price remains at $12.30/cwt.

Brazil's Temporary Reversion to Net Importer

As the largest producer in Latin America by a wide margin, Brazil has been a net exporter for the majority of the past decade. Reversing the recent trend, it is now projected to become a net importer in 2016 for the first since 2010. At that time, excess rain led to a production decline in Rio Grande do Sul, the largest producing region, precipitating a 20 percent rise in imports. Similarly, this year's heavy rain impacted the recently harvested crop, now forecast at 7.1 million tons, down 15 percent from last year. Consequently, 2016 imports are forecast to more than double to 750,000 tons, with most supplies likely to come from neighboring countries. Exports this year are projected to fall to 700,000 tons. With Brazil becoming a net importer and presenting less export competition, the United States is expected to seize additional opportunities to expand exports, particularly in the Western Hemisphere.

The status of net importer is not expected to remain for long, however. In 2017, Brazil's production levels are forecast to rebound to levels similar to 2 years prior and return the country to its net exporting position. The forecast recovery this time is somewhat more muted than in 2011, as 2017 exports are projected to rise only marginally from the prior year.

Weaker Parboiled Trade as Nigerian Policies Restrict Imports

In 2014, global exports of parboiled rice surged, but have declined every year since then in response to developments in Nigeria. The large majority of Nigeria's rice imports are parboiled. This country is the second largest importer of rice and the top parboiled rice importer, accounting for around 40 percent of parboiled trade. Nigeria's imports spiked in 2014, amid lower global prices and strong demand in advance of local elections. However, the purchasing power has eroded as the oil-dependent economy struggles with foreign exchange availability with sharply lower oil prices. In 2015, Nigeria prohibited the use of foreign exchange to purchase rice and maintained a high import tariff, causing imports to plunge. Since March 2016, Nigeria has banned rice importation via land borders, further tightening access to parboiled rice. These policies are expected to persist, causing Nigeria's rice importation to further contract in 2017.

Parboiled rice is processed to preserve nutrients and results in more separate grains when cooked. It typically accounts for less than 20 percent of all exported rice. Thailand and India are the major exporters, whereas the United States and Brazil ship smaller quantities.

PRICES

Since the beginning of June, Thai and Uruguayan export quotes have risen, continuing to lower the premium of U.S. quotes. Over the past month, reports of damage to Thailand's crop have caused export quotes to rise to $432/ton. Severe weather has impacted production in South America as well. With reduced exportable supplies and stronger regional demand, Uruguay's quotes strengthened to $464/ton. Vietnam and Pakistan's export quotes remained unchanged at $369/ton and $410/ton, respectively. U.S. quotes have also settled, sliding marginally to $500/ton on forecasts of a larger crop.

Selected Trade Changes

  • Azerbaijan imports are boosted 100,000 tons to 130,000 for 2017 on expected higher levels of trade from Pakistan.
  • Bangladesh imports are trimmed 100,000 tons to 250,000 for 2016 due to the introduction of import tariffs and to increased wheat imports. Imports are halved to 250,000 tons for 2017, also on higher expected wheat purchases.
  • Brazil exports are cut 100,000 tons to 700,000 for 2016 on a smaller crop.
  • Indonesia imports are raised 152,000 tons to 1.4 million for 2015, while lowered 150,000 tons to 1.9 million for 2016 on the timing of shipments.
  • Iran imports are reduced 350,000 tons to 1.1 million for 2016, as the pace of trade has slowed and the government is set to introduce an import ban this month. For 2017, imports are cut 300,000 tons to 1.2 million due to the projected impact of the ban.
  • Nigeria imports are revised down 300,000 tons to 2.2 million for 2015 on final trade data. For 2016, imports are down 200,000 tons to 2.1 million due to restrictions on foreign exchange access and border trade. For 2017, imports are reduced 100,000 tons to 1.9 million on the extended impact of the import restrictions.
  • Pakistan exports are raised 100,000 tons to 4.5 million for 2016 on a stronger pace of trade.
  • Saudi Arabia imports are raised 156,000 tons to 1.6 million for 2015 on final trade data. For 2016, imports are up 100,000 tons to 1.6 million on larger purchases from Pakistan.
  • U.S. exports are up 100,000 tons to 3.5 million for 2016 on larger exportable supplies and reduced competition from Brazil.
  • Vietnam exports are reduced 100,000 tons to 6.9 million for 2016 due to weaker demand and slower trade to Southeast Asian markets.