Grain Market Review: Rice

by Chris Lyddon
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Demand and currency movements have helped rice to a firm start to 2018. Prices around the world are mostly higher.

In its Grain Market Report published Jan 18, the International Grains Council (IGC) said that the world’s white and parboiled rice markets strengthened since its previous report, published in November, as mild seasonal pressure in Thailand and other parts of Asia was countered by support from firmer international demand and currency movements.

That, coupled with gains in the United States, mean a rise in the IGC GOI rice sub-index of 4%.

“Offers in Thailand for the 5% broken grade advanced by $29 from late November to a six-month peak of $417,” the IGC said. “After easing during December as the main crop harvest progressed, export values moved higher more recently on fresh buying interest from Indonesia — including rumors of a 200,000-tonne purchase — and Malaysia.”

Activity in Vietnam was more muted ahead of the main crop harvest. However, potential demand from Indonesia and the Philippines offered support in the first half of January, as fob quotations posted a modest net rise to $410, the IGC said.

A rise of 5% in broken values in India was mainly on government paddy procurements and steady sales to Bangladesh, the IGC said.

Offers in the United States were underpinned by a tight fundamental backdrop, coupled with slow farmer selling, the IGC said. The No. 2, 4% grade rose to $528 fob Gulf, the highest since November 2014.

The USDA’s Rice: World Markets and Trade report, dated Jan 12, said that export quotes for major supplies had mostly been steady over the previous month, except for the United States.

“The U.S. quotes edged up $20/tonne to $585/tonne, the highest quote since 2014, continuing the trend of rising prices throughout the year amid a much smaller crop,” the report said. “Meanwhile, the Uruguayan quotes are slightly lower at $545/tonne.”

The USDA said that the premium for Western Hemisphere over Asian origins remains large with quotes from the latter between $375 and $425 per tonne for the past few months.

“Demand remains strong from Bangladesh, China, and other major importers, with supplies abundant from recent harvests in Asia,” the USDA said.

In a market update in the Jan 5 edition of its Rice Advocate publication, the U.S. Rice Producers Association said little had changed with the New Year.

“Asian pricing has appreciated somewhat on a tighter supply picture, although much of this can be attributed to the time of the year as opposed to raw market forces,” the U.S. Rice Producers Association said. “This mirrors much of the rest of the international price scene as the market works to gain traction and generate more business.”

In the U.S. domestic cash market, buying interest seems to have picked up notably but the pricing has remained generally stable, the association said.

“Sellers appear to be hesitant to trade rice at the current offers although a few small lots are reported to have moved,” the U.S. Rice Producers Association said. “Unsold inventories will need some substantial price appreciation or market signal in order to extract any significant volume in the next few weeks. The futures market has generally continued its downward trend over the past few weeks and has only in the past day or two seen a shift in attitude. On balance, the industry has seen very little change in fundamentals over the past several weeks but the upside potential for the market seems to be as strong as it was prior to the holidays.”

rice price chart
5% broken milled white rice, Thailand nominal price quote, U.S. dollars per tonne.
Source: World Bank
 
In its Rice Price Update for December, the United Nations Food and Agriculture Organization said that its FAO All Rice Price Index (2002-2004=100) averaged 218.7 points in November 2017, up 1.1% from October and its highest level since March 2015. That brought November 2017 prices to 18% above the nine-year low reached in November 2016.

“A combination of stronger buying interest and currency movements caused November quotations to strengthen in all the major rice market segments, with the exception of the Aromatica market,” the FAO said. “In the latter, prices receded by 1.7% month-on-month, reflecting pressure exerted by new crop arrivals in Pakistan and Thailand.”

The FAO noted that November quotations of Indica white rice were steady to firmer in Asia.

“In Thailand, benchmark 100% B white rice rose by 3% to $424 per tonne, underpinned by a stronger Baht and the launch of government programs encouraging the deferral of paddy sales for 2 to 6 months,” the FAO said. “Sentiment tended to be less firm in the parboiled market.”

 

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