OVERVIEW FOR 2018/19

Global rice production is minimally lower this month, but remains the second-highest on record. Global consumption is forecast fractionally lower, while ending stocks are down marginally. Global trade is raised slightly with higher imports forecast for Venezuela and Iraq.

OVERVIEW FOR 2017/18

Global rice production and consumption are nearly unchanged this month. Lower exports for the United States, Burma, and Argentina are only partly offset by higher exports for Pakistan and Brazil. Global ending stocks are virtually unchanged.

RICE PRICES

Global: U.S. FOB export quotes for long-grain milled rice (bagged) dipped slightly to $600/ton, on promising prospects for the upcoming harvest. However, this remains a near-record premium over Thai rice. Likewise, the United States remains relatively uncompetitive compared to South American suppliers such as Uruguay, still quoted around $520/ton. Over this past month, Pakistani quotes at $410/ton have declined, following a typical seasonal pattern. Thai and Indian quotes are now both around $400/ton, while Vietnamese quotes are down to slightly below $390 on weaker demand from importers.

Smallest Share of U.S. Rice Imports into Mexico since Pre-NAFTA

Year to date in 2018, the U.S. market share of Mexican rice imports is the lowest since 1992. NAFTA entered into force in 1994 and provided the advantage of duty-free imports into Mexico from the United States. As a result, U.S. exports of primarily paddy rice to Mexico soared, both in terms of market share, but also as the importer’s consumption rose. For many years, the United States enjoyed nearly 100 percent market share as Mexico became the leading U.S. rice export market. In light of high global prices, Mexico eliminated rice tariffs in 2008, but only in 2011 did other competitors begin to take market share, a trend that began to reverse as tariffs were reapplied in 2015. However, Mexico established a duty-free annual quota of 150,000 tons for all types of rice from all suppliers in both 2017 and 2018. This has led to further erosion of U.S. market share. January to May 2018 data shows U.S. market share at just under twothirds, with Thailand, Uruguay, and Guyana as other key suppliers. This fierce competition has negative repercussions for U.S. exports, as Mexico has typically accounted for more than 20 percent of U.S. rice exports on a volume basis.

Pakistan Rice Exports Rise to New Record

Pakistan is set to hit a new record for rice exports in 2018, up 18 percent from last year. Supportive factors have included price competitiveness and steady demand from core markets. In addition, the country is also reaping the benefits of not using a fungicide that other competitors use. In 2017, the European Union announced a lower Maximum Residue Levels (MRL) for tricyclazole in rice, with full implementation of these tighter restrictions beginning in 2018. Because Pakistani farmers do not have access to this fungicide, which is commonly used in many other countries, Pakistani exports are more easily entering this market. So far this year, EU imports from Pakistan have doubled, while imports from India are only one-third of the volume compared to the same period last year. In June 2018, Saudi Arabia announced the same lower MRL for tricyclazole in rice. As a result, Pakistan’s market share has the potential to rise in this market, while India’s share will likely decline.