World Grain - February 2013 - 22

GRAINMARKETREVIEW

Rice
Prices firm as output breaks record

U.S. medium/short-grain rough-rice prices, 2012-13
Million cwt (rough basis)
$/cwt
100
27
Total medium/short-grain supplies
Medium/short-grain season-average farm price 1/

24
21

by Chris Lyddon
Rice prices have moved higher with limited supplies available for
export around the world despite a record crop. Even so, Thailand’s
government reportedly faces problems with storage.
According to the most recent U.S. Department of Agriculture (USDA)
Economic Research Service (ERS) Rice Outlook, published on Jan. 15,
global rice production for 2012-13 is forecast at a record 465.6 million
tonnes (milled basis), fractionally above the previous month’s forecast
and up 600,000 tonnes from the production ﬁgure for the year before.
“Production forecasts for 2012-13 were raised for Argentina, Brazil, Guyana and Pakistan, but lowered for Cambodia, the Dominican
Republic, Haiti and Russia,” the report said.
It forecast world rice ending stocks for 2012-13 at 102.5 million
tonnes, down fractionally from the previous month’s forecast and 3
million tonnes below a year earlier.
“Ending stocks forecasts were lowered this month for India, Japan,
Thailand and Vietnam,” it said. It forecast total calendar year 2013
global rice trade at 37.4 million tonnes, up 1.25 million tonnes from
last month’s forecast, but more than 4% below the year-earlier record.
“Import forecasts were raised for Cote d’Ivoire, Ghana, Nigeria
and Senegal,” it said. “Export forecasts were raised for Argentina,
India and Vietnam.”
The ERS report told a tale of increasing prices. “Prices for most
grades of Thailand’s higher quality white milled-rice increased slightly over the past month, mostly due to tighter exportable supplies,” it
said. “Price quotes from Vietnam have also increased slightly over
the past month, mostly due to 2012’s record pace of shipments.
“U.S. prices for long-grain milled rice have also increased over
the past month, mostly due to a fast pace of sales. In contrast, prices
for California milled rice have declined over the past month, as new
sales have been slow.”
The International Grains Council (IGC) stressed how small the
changes in price have been. “Asian white rice markets showed only
modest changes over the month, with the IGC GOI sub-Index only
fractionally higher, as continued pressure from limited export interest outweighed support from tight export availabilities in Thailand
and Vietnam,” it said in its latest Grain Market Report, dated Jan. 17.
“In South Asia, values were steady to marginally ﬁrmer, but supplies were comfortable, especially in India. At $561 fob, export
quotations for 5% broken in Thailand were marginally ﬁrmer, as
underpinning from state paddy intervention buying was mostly outweighed by pressure from very sluggish export demand.”
The IGC explained that the government had announced its intention
to sell 7 million tonnes of rice through diplomatic channels in 2013.
“However, traders were skeptical owing to only minimal success in
ofﬂoading inventories in the past year due to uncompetitive prices,” it
said. “Based on mid-January quotations, 5% broken was trading at up to
$150 per tonne above comparable grades in Vietnam and South Asia.”
The Thai Rice Exporters Association quoted a Bangkok Post report on the planned move.
“The government vows to sell seven million tonnes of its rice
stocks this year through government-to-government (G2G) deals
amid lingering concerns among rice exporters that the mission is impossible,” the report said.
22

18
60

15
12

9
6

3
0

0
90/91

94/95

98/99
02/03
06/07
August-July market year

10/1112/13

Source: 1990/91-2009/10, Rice Yearbook Data Set, Economic Research Service, U.S. Department
of Agriculture; 2010/11-2012/13, World Agricultural Supply and Demand Estimates

“The claim this time is as usual deemed impossible, except that the
government dares to sell Thai rice at price on par with that of Vietnam, now quoted at $420 per tonne,” it quoted a source from the rice
trading industry as saying. There is concern over the government’s
ability to ﬁnd storage for its rice stocks.
In a separate Bangkok post report published Jan. 14, the government was said to be having trouble ﬁnding enough space to hold
its rice stocks, as millers are complaining that their warehouses are
already nearly full.
“Manat Kitprasert, newly appointed president of the Thai Rice
Mills Association, said 800 mills participating in the government’s
rice pledging scheme have very tight space now due to the massive
ﬂood of paddy from the previous season,” the paper said.
“We’ve already sent a letter to the Commerce Ministry asking it
to add more central warehouses, and the ministry has promised it
will,” he said.
There are doubts over whether it can do that in time for the new
second crop harvest. “Without more central warehouses, we expect
the mills will run out of space to keep the rice, and there’s a danger
of them turning away farmers in the scheme,” he added.
The Public Warehouse Organization said the government opened
about 60 central warehouses nationwide for milled rice from the previous season, delivered from participating rice mills.
The IGC described activity in the Vietnamese rice market as “slow.”
“Sentiment was weighed by news that Indonesia’s state procurement agency, Bulog, expected to signiﬁcantly cut its imports in 2013,
owing to ample stocks,” it said. “This helped to outweigh early support from tighter availabilities ahead of this year’s main harvest, although there were reports that exporters were offering discounts on
old crop supplies to free up storage space.
“South Asian export prices were steady to ﬁrmer, although values were sometimes volatile in India owing to currency movements.
Elsewhere, the U.S. milled rice market posted a net gain of 3%, supported by the underlying pace of exports, including an unexpected
sale to Iran, and tight supplies.”
Chris Lyddon is World Grain’s European editor.
He may be contacted at: chris.lyddon@ntlworld.com.
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February 2013 / World Grain / www.World-Grain.com

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