World Grain - October 2016 - 18

GRAINMARKET REVIEW
Global rice supply/demand
(in 1,000 tonnes)

Rice

500,000

Prices lower as 2016-17 crop
expected to exceed record
production

300,000

400,000

200,000
100,000

by Chris Lyddon
2016-17*

2015-16

2014-15

Consumption

2013-14

2012-13

2011-12

Ending stocks

2010-11

Record rice production in 2016-17 will exceed consumption, triggering a rise in stocks. Prices around the world have fallen.
In a commentary to its Rice Price Update report, the United
Nations Food and Agriculture Organization (FAO) said that its All
Rice Price Index (2002-04=100) declined by 4.5 points (2.3%) in
August to an average of 195 points, reversing all gains registered
since May 2016.
"The fall was mostly imputable to easing long-grain quotations,
as the High Quality Indica Index slid 4% below July levels, while
the monthly decline was in the order of 3.1% for the Lower Quality
Indica Index," it said. "Prices of Aromatica rice also softened by 3%,
while the Japonica Index held steady at an average of 221 points.
"With the exception of South American origins, where quotations
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all other major origins tended to subside in August. In the absence of
substantial demand from key buyers such as the Islamic Republic of
Iran and Nigeria, a late August import tender for 250,000 tonnes by
the Philippines failed to make a noticeable mark on prices.
"As a result, quotations continued to fall in Vietnam, taking a
downturn in India, Pakistan and Thailand as well. Benchmark Thai
100%B white rice slid 4.9% below July levels, with Thai parboiled
prices incurring a steeper (11%) monthly drop, amid added pressure
from increased paddy arrivals. Long-grain quotations also softened
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southern producing states."
The FAO's All Rice Price Index showed international rice prices in
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the steepest declines concerning Japonica and Aromatica varieties.
In its Grain Market Report in August, the International Grains
Council (IGC) said that white and parboiled rice prices in Asia
softened in the period since the last report, with the IGC GOI subindex falling by 7% to its lowest level in more than three months.
"The market in Thailand was weighed by sluggish international
demand and increasing secondary (off-season) crop arrivals, while
additional pressure stemmed from efforts by the government to
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$369 fob, 5% broken was down by $43 month-over-month.
"In India, market participants were focused on the progress of
kharif (summer-sown) plantings, which advanced rapidly against the
backdrop of generally good monsoon rains. Offers for 5% broken
fell by $21 to $377 fob. Values in Pakistan retreated sharply, by 14%,
to $352 fob, ahead of the arrival of new crop availabilities, although
losses were capped by recent heavy rains and logistical constraints."
In contrast, sentiment in Vietnam was underpinned by
expectations for increased sales to the Philippines, with 25%

2009-10

Production

*Projected
Source: U.S. Department of Agriculture

broken up fractionally, at $332 fob, the IGC said.
In its Rice Outlook Report, dated Sept. 14, the USDA's Economic
Research Service (ERS) said prices for most grades of Thailand's
regular-milled white rice decreased 8% to 9% over the past month,
mostly due to sales of government-held stocks and strong competition
from Vietnam's rice.
"Vietnam's rice typically sells at prices $20 to $40 per tonne below
prices for comparable grades of Thailand's rice," the ERS said. "U.S.
prices for long-grain milled rice continued to decline over the past
month as well, partly a response to expectations of a bumper longgrain crop in 2016-17 and weaker global trading prices."
The USDA now projects global rice production in 2016-17 at a
record 481.7 million tonnes (milled basis), up 700,000 tonnes from
the forecast it made a month earlier and up more than 2% from a
year earlier.
"The expected recovery from the 2015-16 El Niño-reduced global
rice crop is primarily due to expanded area," it said. "At 161.6 million
hectares, global rice area is up 2.7 million hectares from a year earlier,
but still 200,000 hectares below the 2013-14 record. Brazil, Burma,
Cambodia, China, India, the Philippines, Sub-Saharan Africa, and
the United States account for the bulk of the projected global area
expansion in 2016-17, with India and the United States accounting
for more than a third of the expected increase. The average global
yield of 4.45 tonnes of rough rice per hectare is up slightly from
2015-16 and the highest on record."
It puts global consumption (including a residual component) for
2016-17 at a record 478.8 million tonnes.
"With global production exceeding consumption, total ending
stocks of 115.6 million tonnes are up 1.8 million tonnes from the
previous forecast and up 2.9 million tonnes from a year earlier," it
said. "India, Vietnam, and the United States account for most of the
upward revision in the 2016-17 global ending stocks."
Chris Lyddon is World Grain's European correspondent.
He may be contacted at: chris.lyddon@ntlworld.com.
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