Rice

by Chris Lyddon
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5% broken milled white rice, Thailand nominal price quote. Source: World Bank
 
International rice prices have remained stable in recent months, with increases in some important markets, as what is expected to be a record-setting world crop in 2016-17 is forecast to meet record consumption, producing only a very limited rise in ending stocks.

In its commentary on its Rice Price Update for May, the Food and Agriculture Organization (FAO) said that its All Rice Price index (2002-04=100) averaged 195 points, hardly changed from its March value of 196.

“The one-point decline was brought about by weaker Japonica prices, as quotations in both the Indica and fragrant rice segments tended to firm, supported by increases in the major Asian origins,” it said.

“There were few new rice deals in April, as leading buyers, such as the Indonesian BULOG or the Philippines NFA, remained glaringly absent from the market, while many African countries (not including Nigeria) were reported to hold large supplies,” the FAO said. “Nonetheless, there was a general strengthening of export quotations in Thailand on concerns about the small size of the 2015 secondary crop, which lifted the Thai 100% B white benchmark price to $400.8 per tonne, 2.2% more than in March.

“Prices in most Asian origins also showed a tendency to increase: in Pakistan, on brisk demand; in Vietnam, on concerns about the effects of the severe drought on crops; and in India, on continuing government procurement purchases. In the Americas, prices declined in the United States on very limited new business, while an appreciation of local currencies against the U.S. dollar sustained Argentina and Brazil’s rice quotations.”

The report also noted that the according to the FAO All Rice Price Index, international rice prices have remained stable since October last year, with its April 2016 value still trailing 11% behind year-on-year.

In its Grain Market Report, published at the end of April, the International Grains Council (IGC) said that white and parboiled rice export prices had firmed month-on-month “on continued drought conditions in key producers, although gains were capped by limited fresh demand.” Its IGC GOI rice sub-Index rose by 1% month-on -month.

“In Thailand, offers for key white and parboiled rice grades were boosted by concerns about 2016-17 output prospects,” the IGC reported. “This followed a government announcement that main crop plantings, which were expected to be delayed, could be limited to 8.9 million hectares (9.9 million last year). However, reports that the Ministry of Commerce planned to maximize sales of its heavy stockpile within two months had little discernible market impact.”

In Vietnam, production concerns were supportive to the market, but export prices had been lower to stimulate buying interest. In India, there was mild pressure from the rabi crop, but prices still rose worries about hot, dry conditions.

“Values in South America were mixed, with some underpinning from rain-related fieldwork delays,” the IGC said. “In contrast, medium grain markets were softer, tied to good U.S. planting progress and pressure from harvesting in Australia.”

It quoted U.S. fob prices for 4% broken (California) down by $20, at $700.

The USDA’s Economic Research Service in its Rice Outlook report for May, forecast record high global rice production in 2016-17 at 480.7 million tonnes (milled basis), up 2% from the previous year’s crop, which was reduced by the effect of El Niño.

“The substantial increase in global production is primarily due to expanded area. At 160.6 million hectares, global rice area is up 2.8 million hectares from a year earlier but still 1.1 million below the 2013-14 record,” it said. “Brazil, Burma, Cambodia, Central America, China, India. Indonesia, the Philippines, Sub-Saharan Africa and the United States account for the bulk of the global area expansion in 2016-17, with India, Indonesia and the United States accounting for more than half the increase.

“The global area expansion is largely due to few economically viable alternative planting options, producer support programs in several Asian countries and a desire by many countries to rebuild stocks after El Niño reduced production in 2015-16. The average global yield of 4.46 tonnes of rough rice per hectare is up fractionally from this year and the highest on record. The average global yield has risen just slightly since 2012-13.”

The ERS also forecast global consumption for 2016-17 at a record 480.5 million tonnes, up 2.1 million tonnes on the year. With consumption nearly equal to production, ending stocks are forecast up just 200,000 tonnes at 106.6 million.

“Brazil, Burma, India, Japan, the United States and Thailand account for the bulk of the expected increase in global consumption in 2016-17,” the ERS said.

“In contrast, consumption is expected to decline in 2016-17 in China and Nigeria.”
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