| A GAIN Report on China was released this week centering on its release of old-crop rice. China remains the world’s largest rice importer and is therefore a key driver in global prices, but has been demoted to a low priority for the U.S. rice industry because of poor diplomatic relations. In this most recent report, the news centers around the auction of over 18 million metric tons of old-crop rice beginning in March to use for animal feed and grain alternatives, with the idea of tempering rising grain prices regionally. While 18 million metric tons is a staggering amount in any other region, this is still only half of the amount on offer in 2021 and 2022. These numbers could increase significantly in coming reports, but it is believed that the auctions include 15 MMT of the 2018 crop and 3 MMT of the 2019 crop. It’s also important to note that for the first time since the establishment of the TRQ, China’s rice imports exceeded the TRQ. This has been common for corn and wheat in the past, but 2022 serves as the first time this has happened for rice. This is largely a result of imports of brokens from India as an alternative to corn feed, but nonetheless significant in the global rice market. The February Grain World Markets and Trade report calls for global rice production to be down 2% from last year, but this is unchanged from last month’s report. This will be due in part to smaller crops from Vietnam and Brazil, but this is offset by an increase of 5% in Sri Lanka and Bangladesh. Global consumption is forecast to be up slightly, largely on account of China, and global stocks are down slightly to their lowest levels since 2017/18. The chart below from the World Markets and Trade Report tells the story quite nicely of global rice prices over the last 12 months. You can see, and as we’ve been reporting, U.S. prices continue to lead, while Indian prices are the cheapest. Prices have jumped up in the most recent weeks, partly on account of tightening supply, but largely a result of India’s export tariff and ban situation. Their announcement in October and enforcements since have put upward pressure on prices not for India alone, but for Thailand and Vietnam as well.  Source: USDA Looking now to the Western Hemisphere, rice harvest continues to move forward in South America (Mercosur) where reports are beginning to roll in of crop conditions and yield expectations. There is muted optimism that the drought may not have had as severe of an impact as some were anticipating, but will remain a factor as harvest continues. In the United States, planting intentions will become clear in the next few weeks. What is known, however, is that medium grain plantings will max out based on seed availability. Producers are still evaluating the cost of production for rice vs. alternative crops where available, and the decrease of fertilizer costs to a more “normal” level is encouraging for rice acres. In Texas, there looks to be a significant reduction in acreage because of a lack of water, but producers in Arkansas, Missouri, and Louisiana hope to make up the difference to result in a net gain this year. The weekly USDA Export Sales report finally brings some good news with strong sales to Colombia and Nicaragua. Net sales of 112,800 MT -- a marketing-year high -- were up noticeably from the previous week and from the prior 4-week average. Increases were primarily for Colombia (61,200 MT), Nicaragua (25,000 MT), Japan (13,000 MT), Saudi Arabia (8,500 MT), and Mexico (1,500 MT). Exports of 33,800 MT were up 20% from the previous week, but down 7% from the prior 4-week average. The destinations were primarily Japan (13,000 MT), Saudi Arabia (8,900 MT), Jordan (4,700 MT), Mexico (4,200 MT), and Canada (2,200 MT). |
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