OVERVIEW FOR 2018/19

Global rice production is raised as higher estimated production for Nigeria and Nepal is partially offset by lower production in Australia and Thailand. Global consumption and ending stocks are forecast higher, mainly due to changes in Nigeria. Trade is reduced on lower purchases by Indonesia and Nigeria.

RICE PRICES

Global: Export quotes from the Western Hemisphere remained stable over the past month, with U.S. quotes at $550/ton and Uruguay quotes at $520/ton. Likewise, Asian suppliers were broadly steady. Vietnamese quotes slid slightly to $406/ton and converged closer to Thai quotes at $395. Pakistani quotes dropped to $365/ton on new crop availability, whereas Indian quotes rose slightly from its 2-year low to $370/ton.


Nigeria: A Significant Rice Importer

Over the past several years, the Nigerian government has been promoting the concept of greater self-sufficiency in rice by supporting the local production and aiming to curtail foreign trade.

Nigeria is the top rice producer in Africa. Recent public and private investments have resulted in the area expanding for the main season and dry-season crops, and yields have risen modestly. However, consumption has also been steadily expanding as well. The country has a high population growth rate and dietary patterns for the increasingly urban population shifting from traditional roots and tubers to include more grains such as rice.

The government has imposed various measures, from increased tariffs to restrictions on the use of foreign exchange to limitations on transport across land borders, in an attempt to reduce the quantity imported. These have been effective to some extent, with the direct importation of rice into Nigerian ports down sharply.

Meanwhile, less direct and more circuitous routes have augmented and sustained Nigeria’s imports. The skyrocketing imports of parboiled rice into ports of nearby countries – where parboiled rice is not traditionally consumed – has pointed to the increasing role of transshipments in Nigerian rice importation. Markets in major cities offer ample amounts of imported Thai and Indian parboiled rice, whereas locallyproduced rice is more limited, given high internal transportation costs to move production from the north into the southern port cities.

The USDA estimate for Nigeria’s 2018 imports is revised down based on updated trade data, and the forecast for 2019 imports is also adjusted lower this month. Nonetheless, year-to-year import growth is still anticipated as consumption continues to climb.


U.S. Market Share in CAFTA-DR Slips Amid South American Competition

The Central American countries Honduras, Nicaragua, Guatemala, Costa Rica, El Salvador, as well as the Dominican Republic, comprise a steadily growing rice market that is the scene of intense competition among Western Hemisphere suppliers. Over the past decade, consumption in the region has risen and yet domestic production has seen noteworthy gains, especially in the Dominican Republic, Nicaragua, and Honduras. As such, the imports for this region have experienced modest growth over the same period. The United States secured preferential access to these countries through the Central American-Dominican Republic Free Trade Agreement (CAFTA-DR) which entered into force in 2006 and 2007. The agreement involves diminishing tariffs and rising tariff-rate quotas (TRQs), however, to date not all of the TRQs are being filled consistently. Since CAFTA-DR implementation, the share of U.S. rice imported into the region has fallen. The nearly exclusive market share the United States once held has been eroded by two key players. First of all, the regional agreement has been successful in increasing trade among Central American countries and the Dominican Republic. Additionally, South American suppliers (especially Brazil, Uruguay, and Argentina) have become more aggressive in meeting the high quality standards of this region.


Australian Rice Exports to Slump to Lowest Level in a Decade

Amid an exceptionally dry planting period, Australia producers severely reduced rice planted area. The crop is set to only produce just over 100,000 tons milled rice when it is harvested in early 2019. As a result, Australia is forecast to see exports plummet over 80 percent to 50,000 tons and will become a net importer for only the fifth time on record. Australia’s imports are largely Asian-supplied long-grain and are expected to edge up slightly and have a minor global market effect. However, this development will have a critical impact in the medium-grain market. Australia is typically a key supplier to Asia, Oceania, and the Mediterranean region. As traditional top exporter of medium -grain rice, the United States is likely to compensate for some of the Australian deficit. In addition, China has also begun to expand market share to medium-grain markets at very competitive prices.