Grain Market Review: Rice

by Chis Lyddon
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rice
 
Rice prices have firmed around the world buoyed by strong international demand, bringing them to the highest levels in four years.

In its Grain Market Report, the International Grains Council (IGC) reported that export prices for white and parboiled rice grades registered solid gains at most Asian origins during April, tied to a significant uptick in demand from key buyers, including Indonesia and the Philippines.

“And with offers in the Americas broadly stable month on month, the IGC GOI rice sub-index advanced by about 4%,” the IGC said.

Prices quoted for the 5% broken grade in Thailand rose $29 on the month, to $438 fob, as pressure from off-season paddy arrivals was more than offset by support from strong international demand.

“Amid efforts to replenish state reserves, Indonesia’s purchasing agency, Bulog, reportedly secured up to 680,000 tonnes of 5% and 15% broken rice at $450 to $475 c&f, including 300,000 tonnes from Vietnam, 200,000 tonnes from Thailand, 150,000 tonnes from Pakistan and 30,000 tonnes from India,” the IGC said. “Furthermore, to shore up local supplies, the National Food Authority of the Philippines tendered to import 250,000 tonnes from Thailand/Vietnam through diplomatic channels.

“Firmer buying interest was also supportive in Vietnam, despite the ongoing main (winter-spring) harvest, with 5% broken rising by $26, to $445 fob. In Pakistan, too, white rice markets moved higher, with 5% grade quoted at $454 fob. In contrast, values in India mostly weakened in response to sluggish export interest and winter-sown (rabi) crop arrivals.”

Amid little fresh news, U.S. prices were steady month on month on tight supplies, while most South American offers were little changed on mild harvest pressure, the IGC said.

The United Nations Food and Agriculture Organization reported that its All Rice Price Index averaged 230.6 points in April 2018, up 3.4 points (1.5%) from March, reaching its highest level since November 2014.

“Indica prices led last month’s advance, rising 4% to 5% above March levels on renewed Asian demand,” the FAO said. “By contrast, lackluster buying interest weighed on Basmati values, lowering the Aromatic Index by 2% month on month. April quotations of Japonica rice remained close to March values. Asian prices of Indica rice were heavily influenced by the return of Indonesia and the Philippines to the international market during April.

“In Pakistan, export values rose by 9% to 57-month highs following the conclusion of a 150,000-tonne sale to Indonesia’s Bulog midway through the month. In Thailand and Vietnam, support provided by previous large deals with Bulog was amplified by the launch of much-awaited G2G import tender by the Philippines on April 27. Although the latter eventually closed with no awards, anticipation of sales to the Philippines lifted Indica prices in both countries 4%-5% month on month. Sentiment tended to be less bullish in India, where price gains were capped by Rabi arrivals and a depreciating Rupee.”

Rice
Rice (Thailand), 5% broken, white rice (WR), milled, indicative price based on weekly surveys of export transactions, government standard, f.ob. Bangkok. 
Source: USDA, World Bank
 
For the Americas, the FAO reported that export values held steady in Argentina and Uruguay, while supply tightness continued to underpin quotations in the United States. Prices also posted a 2% monthly upturn in Brazil, as support provided by multiple PEP and PEPRO auctions since February set in. The auctions, combined with a fast pace of sales since the start of the year, offset downward pressure stemming from a weaker Real and harvest progress.

“According to the Index, international prices in the first four months of the year were 17% above their levels in the corresponding period of 2017,” the FAO said.

The USDA’s “Grain: World Markets and Trade” report for May reported that U.S. FOB export quotes for long-grain milled rice (bagged) rose in May to the highest level in four years at $620 per tonne.

“South American quotes remained constant since last month with the onset of harvest,” the USDA said.

Uruguayan quotes were steady at $522 per tonne. Thai quotes rose to $446 per tonne.

“Interestingly, two origins that tend to have lower quotes, Vietnam and Pakistan, saw their quotes rise higher than Thai quotes this month to $462 per tonne and $455 per tonne, respectively,” the USDA said. “Consistent demand from Indonesia and the Philippines has continued pushing Vietnamese and Pakistani quotes higher. Meanwhile, Indian quotes remained flat rising marginally to $415 per tonne.”

In its Rice Advocate newsletter on May 11, the U.S. Rice Producers Association reported “another slow week in the rice trade with old crop virtually gone and new crop still being too distant to generate much excitement. The general market indicators continue to suggest that the market undertone is solid if not bullish for new crop, and the biggest question mark is how these factors will materialize,” it said.

Looking at exports and USDA ideas on price, it suggested they pointed to a strong market for new crop.

 

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