OVERVIEW

For 2017/18, global production is raised this month on a record crop in China. Trade is forecast higher, though still slightly below the previous year’s record. Larger imports are forecast for several African countries, while export prospects for Burma and Vietnam are raised from last month. Global stocks are raised, mostly on account of China, and are the third-largest on record.

PRICES

Uruguayuan export quotes have risen this past month to $545/ton, reflecting pre-harvest tightening supplies in the face of a smaller crop. This has caused South American quotes to edge closer to U.S. quotes, which have remained steady at $565/ton. Meanwhile, Asian quotes have diverged in the past month with Thai quotes rising to $413/ton, reflecting a stronger baht. Both Indian and Vietnamese quotes fell to $385/ton and $391/ton, respectively. Pakistan is quoted the lowest at $375/ton.

South America Paddy Exports Expand Challenging U.S. Paddy Export Dominance

Over 40 percent of U.S. rice exports (product weight basis) are paddy rice, which differs from world market trade as the top Asian exporters almost exclusively ship milled rice. This feature is attributable to two factors: U.S. milled rice prices tend to be higher than respective Asian prices, making it difficult for U.S. rice to compete in Asian markets; and the majority of U.S. rice flows to Western Hemisphere markets, many of which have mills that can easily process domestic and imported rice, as well as policies that support their milling industry.

A decade ago, the United States had a near-monopoly of the paddy trade in the Western Hemisphere, with other regional suppliers as marginal actors. While the United States is still the primary paddy supplier, Brazil, Guyana, Uruguay, Paraguay, and Argentina are now adding greater competition.

In 2011, abnormal growing conditions caused chalkiness in U.S. rice kernels, and some unsatisfied Central American buyers began to buy from South America, especially from Brazil. In 2014 as petroleum prices plummeted, Guyana’s trade with its neighbor and primary buyer, Venezuela, abruptly dropped. Consequently, Guyana has been pressing into other paddy markets. Most notably, since July this year, Guyana has shipped over 50,000 tons to Mexico, accounting for 7 percent of paddy imports year-to-date. This is the top paddy rice market in the Western Hemisphere, and had been supplied exclusively by the United States. The newest emerging paddy exporter is land-locked Paraguay, where production has more than quadrupled over the past decade. Currently, its paddy exports are largely focused on supplying Brazil via border trade.

In aggregate, these South American suppliers pose a new dynamic in paddy trade in the Americas, creating much fiercer competition for the paddy market that had previously been almost exclusively the U.S. domain. Further abroad, as Egypt’s exports have dwindled, the United States has vied with Russia and the European Union for Mediterranean medium-grain paddy markets, particularly Turkey.

TRADE CHANGES IN 2018

Selected Importers

  • Indonesia is lowered 200,000 tons to 300,000 on continued self-sufficiency targets and lower expected demand amid changes to the raskin program.
  • Kenya is up 100,000 tons to 700,000 on prospects for growth in demand for Asian varieties.
  • Liberia is raised 140,000 tons to 400,000 on rising demand for low-priced rice from India and China.
  • Togo is lifted 100,000 tons to 300,000 on a growing appetite for imported rice from India and Thailand.

Selected Exporters

  • Burma is raised 400,000 tons to 3.0 million on expected strong trade to China and on diversification to additional markets.
  • Vietnam is up 200,000 tons to 6.5 million on expectations of growth in shipments to China and other markets.

TRADE CHANGES IN 2017

Selected Importers

  • Bangladesh is raised 250,000 tons to 1.4 million on higher imports from India.
  • Brazil is up 160,000 tons to 800,000 on a strong pace of trade and shipments from Guyana.
  • Indonesia is down 200,000 tons to 300,000 on the lack of end-of-year government purchases, despite relatively low stocks.
  • Liberia is up 100,000 tons to 370,000 on shipments from India and China.

Selected Exporters

  • Burma is raised 300,000 tons to 3.1 million on larger shipments to China, Africa, and the European Union.
  • Cambodia is lowered 200,000 tons to 1.2 million reflecting delayed shipments to Bangladesh.
  • India is up 200,000 tons to a record 11.6 million on strong sales to Bangladesh, Sri Lanka, Iran, and African countries.
  • United States is lowered 100,000 tons to 3.4 million on a slower pace of shipments to date.
  • Vietnam is up 400,000 tons to 6.6 million on large shipments not only to China but also to Southeast Asia, Africa, and the Middle East.