OVERVIEW

For 2016/17, global production is up, primarily on improved prospects for the Indian crop. The U.S. crop is adjusted down but is forecast up 23 percent from the previous year. The global trade forecast is raised marginally this month with stronger exports for India, but is the lowest in 4 years. The U.S. season-average farm price is lowered 20 cents to $10.70.

Indian Exports to Again Exceed Thai As Indian Stocks Remain Ample

India is poised to eclipse Thailand in rice exports for the sixth consecutive year. After over 30 years of dominance as the top exporter, Thailand abdicated this position to India in 2012. Both countries have core markets for their respective fragrant varieties, basmati and jasmine; however, they have been in fierce competition for the non-fragrant markets.

A historical analysis of key features of the countries' policies and stock situations illuminates core factors leading to current prospects. In late 2007, India imposed an export ban on all nonbasmati exports in an effort to ensure sufficient supplies for their population amid rising global prices. Thailand filled this void with additional exports. The Indian Government removed the export ban in 2011 but stocks had already doubled. Supplies in India multiplied as production and stocks expanded

On the other hand, Thai domestic policies to support farmers caused the government to acquire large volumes of rice and a build-up in stocks. As global prices tumbled in 2012, Thai rice was no longer competitive, and their stocks increased throughout 2013. In 2014, the new Thai government allowed prices to drift lower, enabling the country to regain some but not all of lost market share.

Since 2014, the stocks in both countries have been declining. During 2016, Thai stocks have been auctioned at a rapid pace to compensate for lower domestic production. Meanwhile, Indian stocks have been higher than anticipated, indicating weaker domestic use for rice.

Indian exports in 2016 have remained strong and thus far have exceeded Thai exports. Looking forward, India is now forecast to have a near-record 2016/17 crop to supplement their still ample stocks, further pressuring prices and improving competitiveness.

PRICES

Export quotes continued to decline over the past month for suppliers in both the Eastern and Western hemispheres. The United States quotes were pressured down $5 to $475/ton on record supplies, despite concerns about flooding in the Southern region. Thai quotes dropped $33 to $391/ton as auctions of old crop stocks continued, though quotes recently rose in response to the Philippines' tender requesting new crop rice. Indian quotes slid $40 to $355/ton as crop prospects improved. Pakistani quotes are down $65 to $340/ton as the new crop is forecast to be ample.

SELECTED TRADE CHANGES for 2016

  • Burma's exports are lowered 250,000 tons to 1.4 million on sluggish sales, particularly as border trade has declined.
  • India's exports are raised 700,000 tons to 10.0 million on the strong pace of trade to date amid lower than expected domestic consumption.
  • Thailand's exports are cut 100,000 tons to 9.7 million on slow recent shipments, despite recent auctions from stocks.
  • Vietnam's exports are reduced 400,000 tons to 6.0 million as sales to East and Southeast Asia have been slower than usual.
  • Guinea's imports are up 100,000 tons to 450,000 on strong trade to date.

SELECTED TRADE CHANGES for 2017

  • India's exports are boosted 700,000 tons to 9.5 million for 2017 on the larger crop and improved competitiveness.
  • Vietnam's exports are down 400,000 tons to 6.4 million on reduced competitiveness.

PULSES: WORLD MARKETS AND TRADE

India has been the largest world importer of pulses (HS 0713), including dry peas, chickpeas, lentils, and dry beans for the past 6 years, increasing from 35 to over 50 percent of global trade. Pulses are an important part of India's diet. Despite declining per capita consumption, population growth has driven overall consumption. Imports have filled the gap as producers favor other crops with higher returns.

Canadian exports have a competitive advantage in transportation over U.S. exports to India. Nevertheless in 2015, U.S. exports to India of dry peas, chickpeas, and lentils combined were about 260,000 tons. Since 2010, India has accounted for one-third of U.S. exports of these three commodities, and has been the largest single destination.