OVERVIEW FOR 2018/19

Global rice production is raised this month on a larger crop in India, partially offset by a reduction in the crop in Egypt. Nonetheless, production is still forecast lower than the prior year’s record. Global consumption is forecast marginally higher. Ending stocks are raised from last month. Trade is largely unchanged as higher imports for the Philippines are mostly offset by lower imports for China.

OVERVIEW FOR 2017/18

Global rice production and consumption are both adjusted marginally lower this month. Global ending stocks are raised. Global trade is nearly unchanged with offsetting changes.

RICE PRICES

Asian: Over the past month, Thai quotes continued to climb to $409/ton, supported by the currency and improved prospects to export large volumes to the Philippines. Demand from Southeast Asia was also a key factor in supporting Vietnamese quotes, now at $398/ton. Pakistani quotes are relatively steady at $385/ton, whereas Indian quotes have become even more competitive at $375/ton on slow buying interest. This is the lowest Indian quote in more than a year and a half.

Western Hemisphere: U.S. FOB export quotes for long-grain milled rice (bagged) have continued to decline to $545/ton as the larger new crop has become available, with over 70 percent of the crop harvested. However, quotes remain above South American suppliers such as Uruguay ($520/ton) and Brazil ($480/ton). Western Hemisphere prices remain above Asian prices.

Brazil Reasserts Role as Top South American Exporter

Brazil is the top Western Hemisphere rice producer and consumer. It is also a significant import market, and in fact a net importer as recently as 2016 and 2017. However, this year with more ample supplies, Brazil is reverting to its position as not only a net exporter but also as the top South American supplier to the global market. Brazil is forecast to export 1 million tons (milled basis) in 2018, declining to 850,000 tons in 2019 on rising competition from Paraguay, Guyana, and Argentina. In the first 9 months of the year, nearly half of exports have been as paddy rice, challenging U.S. export opportunities in Venezuela, Costa Rica, and Nicaragua. Brazilian milled rice is mostly shipped to Latin America, whereas broken rice is destined for West Africa.

Record Egyptian Rice Imports amid Smallest Crop in 20 Years

Egypt is facing the prospect of record rice imports as a consequence of strictly enforced limitations on area permitted for rice cultivation. Historically, Egypt has cultivated rice along the Nile Delta region, and until recently was a net exporter. However, as a result of concerns about water usage, the government set and enforced area restrictions. Rice production in 2018/19 is down by more than a third from the prior year, the lowest since 1998/99. Tight supplies have curtailed domestic consumption.

These policies to restrict domestic rice production have a global impact. The medium-grain market is very thinly traded, and Egypt has largely abdicated its role as an exporter over the past few years. Moreover, Australia’s production is forecast to decline for a second consecutive year. Egypt became a net importer in 2017/18 with the government indicating further willingness to import rice, even in its paddy form. Following the last severe reduction in area in 2010/11, the 2011/12 imports were around 300,000 tons and largely supplied by India as milled rice. Ongoing efforts to address phytosanitary issues may provide an opportunity for U.S. rice to be supplied to the market. This potential to export to a former competitor is a significant reversal in the medium grain market.