Highlights

Rice production for MY 2017/18 (May-April) is forecast at 34.7 MMT on higher yields. Wheat production for MY 2017/18 (July-June) is forecast at 1.3 MMT on higher planted area in response to higher demand. Corn production for MY 2017/18 (May-April) is forecast to rise to 3.1 MMT. As for imports, wheat imports in MY 2017/18 are projected to rise to 5.9 MMT on expectation of lower international prices and fast growing demand; corn imports in MY 2017/18 are also forecast to rise to 1 MMT on increased feed usage in the expanding poultry sector.

Rice, Milled

Production:

In marketing year (MY) 2017/18 (May to April), total rice production is forecast higher by 0.4 percent to 34.7 million tons on higher yields, but forecast for planted area is down 0.3 percent to 11.7 million hectares on lower Boro (planted in December/January) and Aus (planted in March/April) rice planted area. Farmers are reportedly switching to more profitable crops like maize, potato, jute, pulses, and oilseeds. Nevertheless, post contacts indicate that planted area for Aman rice (planted in July/August and harvested in November/December) will rise to meet staple food demand and to avoid switching crops during the monsoon season.

Post contacts and official data suggest total rice production in MY 2016/17 will rise 0.2 percent to 34.6 million tons (comprised of 18.9 million tons of Boro rice, 2.3 million tons of Aus rice, and 13.4 million tons of Aman rice). Although farmer’s preference for irrigated Boro rice area fell due to higher production costs for irrigation and labor, rice yields actually improved on increased usage of HYV hybrid rice variety.

Trade:

Imports for MY 2016/17 are estimated at 100,000 MT higher on demand in local markets. Rice imports for MY 2017/18 are projected to increase 125,000 MT on expectations of better pricing from regional suppliers. Bangladesh importers and rice millers have requested the government of Bangladesh (GOB) reduce import tariffs to ensure adequate domestic supplies, but the GOB believes domestic supplies of paddy rice in the wholesale market still are sufficient. Sources indicate that the spread between high domestic prices and lower international prices is great enough that importers are still netting profits despite the high import tariffs. Bangladesh primarily imports rice from China, Thailand, and India, with India being the largest supplier in recent years. Meanwhile, Bangladesh also exported a small amount of rice seed to the government of Bhutan; a state owned enterprise, The Farm Machinery Corporation Limited (FMCL) of Bhutan, cultivates 5 MT of imported variety BRRI Dhan-26 and BRRI Dhan-28.

Stocks:

The government of Bangladesh (GOB) procures grain for its public food distribution system (PFDS). As of March 21, 2017 rice stocks in the PFDS system are estimated at 550,660 MT, which is approximately 47 percent lower than last year.

The Ministry of Food (MOF) states that as of March 21, 2017, the government had procured 424,458 MT of rice, which is 85 percent of the target for FY 2016/17. Purchases included 0.45 MT of parboiled rice and 50,000 MT of non-parboiled Aman rice from December 1, 2016 to March 30, 2017, at prices of BDT 33 (US$ 0.41) and BDT 32, respectively. GOB distributes rice to the poor through various programs and from July 1, 2016 to March 16, 2017 total distribution was 1.1 MMT, which is up 56 percent year on year. An additional 0.3 MMT of wheat was also distributed through the PFDS system.

Policy:

On its annual budget for FY 2016/17, GOB imposed 25 percent import tariffs on husked (brown) rice, fortified rice kernels, and other semi-milled or wholly-milled rice to protect domestic rice producers. Slowed imports likely will result in lower ending stocks.

In MY 2017/18 GOB has plans to expand HYV and Nerica variety in Aus rice season by distributing seed and fertilizer and by subsidizing irrigation to over 200,000 small and marginal farmers. Another recent government policy involves required use of jute hessian sacks for preserving food grains in the public silos. This policy will generate increased jute cultivation to supply demand for some 10 million jute sacks annually, an economic value of about TK 540 million.

Marketing

Bangladesh typically purchases lower-quality (25 percent or more broken) parboiled rice. A small niche market exists for high quality (e.g. basmati) rice imports, however, till now U.S. rice exports have not been price competitive.

Prices

In March 2017, wholesale and retail prices for rice were BDT 36 (US$0.45) and BDT 38 per kilogram, which is 38 and 28 percent higher than last year. Despite good harvest of the Aman season rice (which is marketed in December), prices of milled rice in MY 2016/17 soared to a three-year high. Some sources claim the leading rice traders are sitting on stocks to create an artificial shortage and thus push up prices. Since the private sector provides no official records of grain stocks, this claim is not easily confirmed or disputed.

Production, Supply and Demand Data Statistics:


Rice, Milled

2015/2016

2016/2017

2017/2018

Market Begin Year

May 2015

May 2016

May 2017


USDA


Official

New

Post

USDA

Official

New

Post

USDA

Official

New

Post

Area Harvested

11,765

11,765

11,768

11,748

0

11,715

Beginning Stocks

1,592

1,592

1,205

1,205

0

879

Milled Production

34,5

34,5

34,581

34,578

0

34,7

Rough Production

51,755

51,755

51,877

51,872

0

52,055

Milling Rate (.9999)

6,666

6,666

6,666

6,666

0

6,666

MY Imports

217

217

50

100

0

125

TY Imports

35

35

50

45

0

50

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

36,309

36,309

35,836

35,883

0

35,704

MY Exports

4

4

0

4

0

4

TY Exports

4

4

0

4

0

4

Consumption and Residual

35,1

35,1

35

35

0

35

Ending Stocks

01.00

1,205

836

879

0

700

Total Distribution

05.02

36,309

35,836

35,883

0

35,704

Yeld

4.40

4.40

4.41

4.42

0

4.44

Wheat

Production:

Wheat planted area and production for MY 2016/17 have been revised to 415,000 hectares and 1.27 million tons, respectively; fear of wheat blast dissuaded some farmers from planting wheat. Assuming favorable weather conditions, the MY 2017/18 wheat crop (planted in November/December and harvested in March/April) is forecast to reach 1.3 million tons from 420,000 hectares of land. Wheat accounts for about 12 percent of total cereal consumption; it is the second most important food staple in Bangladesh after rice. Post contacts advise that the wheat blast outbreak was insignificant in this wheat season.

Imports:

In MY 2016/17, Bangladesh wheat imports are estimated at 5.7 MMT, a 21 percent increase from MY 2015/16 due to record low prices in the international market and comparatively high prices in the local market. Bangladesh wheat imports for MY 2017/18 are forecast at 5.9 million tons (1.35 MMT by the GOB and 4.55 MMT through private commercial sales). The import forecast in MY 2017/18 is 3.5 percent higher than the previous year due to changing food consumption habits, fast urbanization, and expected lower prices in international markets.

Bangladesh meets 75 percent of its wheat consumption needs through imports, sourcing lower quality wheat from Russia and Ukraine, and higher quality wheat from Canada, Australia and the United States. According to trade sources, during the current MY 2016/17 about 40 percent of wheat imported is sourced from Russia and 30 percent from Ukraine.

Wheat imports in MY 2015/16 were 416,310 metric tons. In MY 2016/17, from July 2016 to March 2017 GOB imported 223,210 MT of wheat through public tender.

Stocks:

The Ministry of Food (MOF) reports that as of March 21, 2017, public distribution, up 9.7 percent year on year, has lowered GOB wheat stocks to 182,720 tons, down from 346,380 tons year on year.

Policy:

Wheat imports currently have a zero duty and no quantity restrictions. However, the public wheat tendering process does not encourage wide participation. Many government tenders are never accepted since bidders often quote high prices to cover various risk factors. Despite some changes in GOB tender specifications, technical requirements such as “weight and quality at final discharge” are not in line with international practice, and therefore discourage broad participation in the tendering process.

Marketing:

Bangladesh is known as a price sensitive wheat market and typically imports the lowest cost wheat. The small premium Bangladesh importers are willing to pay for better wheat is usually less than the additional cost of freight from distant origins. As a result, premium wheat from the United States is generally uncompetitive.

The GOB does not accept a certificate from the country of export certifying weight and quality (e.g., FGIS’ Official Export Inspection Certificate). This creates significant uncertainty for U.S. exporters as weight and quality are decided at port of final discharge; this is another reason participation from the U.S. trade in GOB tenders generally remains low.

Prices:

In March 2017 average retail and wholesale prices of loose wheat flour (atta) in Dhaka market were BDT 25 (US$0.31) and BDT 20 per kilogram. Year on year the price of flour was about 4 percent and 2 percent lower at retail and wholesale markets. Low international wheat prices and high stocks have kept domestic wheat flour prices low over the last few months.


Wheat

2015/2016

2016/2017

2017/2018

Market Begin Year

Jul 2015

Jul 2016

Jul 2017

Bangladesh

USDA


Official

New

Post

USDA

Official

New

Post

USDA

Official

New

Post

Area Harvested

420

420

425

415

0

420

Beginning Stocks

1,767

1,767

2260

2260

0

2,535

Production

1,300

1,300

1335

1,275

0

1,300

MY Imports

4,693

4,693

4,693

5,700

0

5,900

TY Imports

4,693

4,693

4,693

5,700

0

5,900

TY Imp. From US

87

87

0

200

0

250

Total Supply

7,760

7,760

9395

9,235

0

9,735

MY Export

0

0

0

0

0

0

TY Export

0

0

0

0

0

0

Feed and Residual

0

0

0

0

0

0

FSI Consumption

5,500

5,500

6850

6700

0

7,000

Total Consumption

5,500

5,500

6850

6700

0

7,000

Ending Stocks

2,260

2,260

2545

2,535

0

2,735

Total Distribution

7,760

7,760

9395

9,235

0

9,735

Yield

3.10

3.10

3.14

3.07

0

3/10

Corn

Production:

Estimated corn production is 2.8 MMT in MY 2016/17. Assuming normal growing conditions, in MY 2017/18 corn planted area is forecast at 440,000 ha and production at 3.1 MMT on expectation of increase in feed demand from poultry and aquaculture industries. This 8.6 percent increase in planted area over MY 2016/17 also reflects farmers’ desire to utilize less fertile sandy soil (char land).

The area planted for corn in Bangladesh has expanded at 16 percent per year over the last five year period, a growth rate faster than for any other crop. The growth is fueled by expansion of corn for use as a feed ingredient in the livestock and poultry sector, which in turn have kept margins high for corn farmers.

Corn market price mechanisms are sensitive and farmers in turn respond quickly to price changes of corn and competing crops: one study estimated that an increase in corn price by ten percent leads to a rise in production of four percent. In addition to favorable prices attracting farmers to plant corn, the growing scarcity of water for irrigation also has prompted farmers to shift from wheat and Boro rice to corn. The corn growing season does conflict with growing seasons for wheat and Boro rice, and other cash crops like potato, and winter vegetables, nevertheless, corn cultivation remains a preferred option particularly for non-irrigated land.

Trade:

For MY 2017/18, corn imports are projected up 28 percent at 1 MMT, which assumes increasing demand for use in livestock feed production and mixing with wheat flour for human consumption.

Stocks:

There is no GOB official stock information for corn stocks; GOB does not procure corn locally.

Marketing:

As of March 2017, corn prices observed in the retail and wholesale market remain attractive to farmers: BDT 22 (US$ 0.28) and BDT 17 (US$ 0.22) per kilogram, respectively, though prices are lower year on year by 12 percent and 7 percent.

Production, Supply and Demand Data Statistics:


Corn

2015/2016

2016/2017

2017/2018

Market Begin Year

May 2015

May 2016

May 2017

Bangladesh

USDA


Official

New

Post

USDA

Official

New

Post

USDA

Official

New

Post

Area Harvested

0

378

0

405

0

168

Beginning Stocks

0

0

0

374

0

3100

Production

0

2605

0

777

0

1000

MY Imports

0

769

0

772

0

950

TY Imports

0

748

0

193

0

250

TY Imp. From US

0

99

0

2817

0

4268

Total Supply

0

3374

0

3968

0

168

MY Export

0

0

0

0

0

0

TY Export

0

0

0

0

0

0

Feed and Residual

0

2700

0

3500

0

3800

FSI Consumption

0

300

0

300

0

300

Total Consumption

0

3000

0

3800

0

4100

Ending Stocks

0

374

0

168

0

168

Total Distribution

0

3374

0

3968

0

4268

Yield

0

6.89

0

6.96

0

7.05