Stiff Competition Among Rice Exporters as Global Trade Expands

Global rice trade is forecast to rise in 2017, on larger imports by Asian and Middle Eastern countries. Trade is projected up 3 percent from the prior year to the third-largest on record. This reverses the recent 2-year contraction that occurred as countries sought to increase domestic production and selfsufficiency, at times through restrictive trade measures.

With global supplies at a record and production up for most major exporters, the competition for exports is expected to be intense. India is forecast to remain the largest exporter for the sixth consecutive year. Basmati exports account for over a third of its trade, and competition from Pakistan is limited. For non-fragrant white rice, exports are forecast to remain competitive on sufficient carry-in stocks and a larger crop.

Meanwhile, exports from Thailand are forecast slightly higher this year, aided by expanded production and large carry-over. The government is committed to liquidating stocks that were accumulated over several years. Although the majority of remaining stocks are considered non-food grade quality and are expected be used domestically for feed or ethanol, much of the food-grade quality may be allocated to foreign markets. These exports will likely continue to compete with lower-priced Vietnamese rice. Exports from Vietnam are expected to rebound this year from the lowest level in a decade. This is based on improved prospects to Asian markets such as the Philippines, where quantitative restrictions are set to expire later this year.

Given this stiff competition, U.S. exports are forecast up only fractionally from the previous year, driven by stronger demand in traditional Western Hemisphere markets.

OVERVIEW

For 2016/17, global rice production, already at a record, is raised fractionally this month on revisions to the crops in Bangladesh and Kazakhstan. Global trade is up, with larger imports for the United Arab Emirates and Brazil. Exports are raised for India, Thailand, and Burma. Global stocks are revised slightly lower, but are still the highest in 15 years.

PRICES

Exporter quotes for long-grain rice rose for a number of markets over the past month. Pakistani quotes increased the most, up $40/mt to $395, on stronger purchases from China and East Africa. Indian quotes rose $15/mt to $370, reflecting robust African purchases. The Vietnamese quotes went up $7/mt to $346, with relatively quiet trading during the Lunar New Year holidays. Western Hemisphere quotes rose $20/mt to $494 for Uruguay and $5/mt to $460 for the United States, partly in response to the recent Iraq tender. In contrast, Thai quotes declined $9/mt to $370 in anticipation of government auctions of stocks.

SELECTED TRADE CHANGES for 2017

  • Burma exports are lifted 100,000 tons to 1.5 million on improved prospects to Asian markets.
  • India exports are raised 300,000 tons to 10.3 million on enhanced opportunities in the Middle East.
  • Thailand exports are boosted 300,000 tons to 10.0 million on commitments from the government to auction food-grade stocks. Exports for 2016 are up 367,000 tons to 9.9 on final data.
  • United Arab Emirates imports are up 140,000 tons to 750,000 on growing consumption demand by foreign workers and tourists, in addition to the local population. Imports for 2016 are also lifted 70,000 tons to 670,000.