World Grain - June 2015 - 22

GRAINMARKET REVIEW

Rice
Sluggish demand from importers
makes for soft prices
by Chris Lyddon

500
400
300
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100
Apr 2015

Mar 2014

Feb 2014
Jan 2014

Dec 2014
Nov 2014

Oct 2014
Sep 2014

Aug 2014

July 2014

Jun 2014

(in 1,000 tonnes)

May 2014
Apr 2014

Slow demand from importers, notably in Africa, has given the rice
market a soft tone in recent weeks, with prices steady to lower, even
though a record new crop is set to meet even higher consumption.
"Amid few fresh fundamental developments, Asian white and parboiled rice markets were steady to modestly lower during April," the
International Grains Council (IGC) said in its Grain Market Report.
"Highlighting generally weaker sentiment, the IGC GOI rice subIndex fell by around 1% m/m, to its lowest since early 2008."
Export prices in Thailand eased, the key 5% broken grade down
by $5, to $385 fob, it said. "Despite mild support from domestic purchases ahead of the Songkran festival, a period associated with increased consumption, sluggish international demand weighed.
"Aside from sales through diplomatic channels, buying interest
from key importers in Asia and Africa has been limited, while the
temporary suspension of state auctions to sell stockpiled rice has
added to uncertainty," it said. "In Vietnam, broken rice markets fell
slightly as initial support from the government's main crop stockpiling scheme was outweighed by limited export interest - including
from China, a major buyer in recent years."
The 5% grade fell by $9, to $359 fob.
"Markets elsewhere in Asia were mixed, with offers in India
steady to lower in thin activity, partly pressured by the imminent
winter-sown (rabi) crop harvest," it said. "Outside of Asia, export
prices in the Americas dropped further, with values in Argentina and
Brazil weighed by increasing new crop availabilities."
The USDA's Economic Research Service (ERS), in its Rice Outlook, also noted a fall in most grades of Thailand's regular-milled
white rice by 2% to 4% from a month earlier, which it blamed on
a lack of new sales and a weaker baht. "Price quotes from Vietnam
have decreased slightly over the past month, with new sales slow,"
it said. "U.S. prices for long-grain milled rice and rough rice have
declined from a month earlier."
The ERS projected global rice production in 2015-16 at a record
482.1 million tonnes on a milled basis, 6.4 million tonnes more than
in the previous year. "The bumper crop is primarily due to expanded
area," it said. "At a record 161.9 million hectares, global rice area in
2015-16 is up 1.7 million hectares from a year earlier."
Most of the increase in area is in Bangladesh, India, and Thailand.
The ERS projects global rice consumption up 1% at 489 million
tonnes in 2015-16. "This is the third consecutive year of consumption exceeding production," it said. "China accounts for the bulk of
the projected increase in global consumption. At 151 million tonnes,
the country's rice consumption is up almost 2% from a year earlier, 5
million tonnes above production, and the highest on record."
ERS is also projecting record consumption in Bangladesh, Burma,

Rice exports by key countries

Source: World Bank

Cambodia, India, Indonesia, the Philippines, Thailand, and Vietnam.
"Although not a record, U.S. consumption is projected to increase
1% in 2015-16 to 4.17 million tonnes," it said.
In the commentary accompanying its Rice Price Update, the
United Nations Food and Agriculture Organization (FAO) also noted
falling prices. "In April 2015, the FAO All Rice Price Index (20022004=100) averaged 218 points, only 1 point less than in March, but
the eighth consecutive month of declines," it said. "Quotations in the
Higher Quality Indica, Aromatic and Japonica rice segments were
slightly down compared to March, while Lower Quality Indica prices showed some strength, with the corresponding sub-index gaining
about 2 points, or 1%."
It reported a falling price trend in Thailand on subdued demand,
despite growing evidence of a much reduced 2014 secondary crop.
"In Vietnam, the ending of the government 1-million-tonne procurement round may have contributed to a retreat of export quotations, while in India a similar weakening could be partly attributed
to the arrival of the new supplies from the Rabi harvest," it said.
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rains and logistical domestic constraints that hindered rice transportation and deliveries. Prices were under downward pressure in South
America, especially Brazil and Uruguay, but largely stable in the
United States.
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four months of 2015 were 6.3% lower than in the corresponding period in 2014. Only Japonica rice prices averaged higher than last year,
amid prospects of continuing tight supplies from Australia and California. Apart from the strong dollar, the general tendency for weaker
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especially from African countries."
Chris Lyddon is World Grain's European editor.
He may be contacted at: chris.lyddon@ntlworld.com.
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