Robust demand from Southeast Asian rice importing countries
Rice demand continues in the international market.
Increasing international rice prices are a disturbing trend in rice importing countries. Standard rice prices soared 20 percent to 45 percent in major Asian rice-producing countries last 2020. While lower-quality rice is imported as an alternative for animal feed due to increasing shipping costs which is creating a panic for poorer countries. FAO Rome rice economist Shirley Mustafa said that there are no immediate rice supply issues in rice importing countries from Africa, but if rice exports from Asia get reduced it might lead to uncertainties between Jun’21-Oct’21 which is usually a lean rice production period for northern and western Africa. Logistical bottlenecks might lead to rice supplies getting squeezed and food inflation, possibly aggravating the economic suffering caused by the COVID-19. Sub-Saharan Africa is one of the main rice importers, where 40 percent of local rice consumption depends on imports.
According to Himanshu Agarwal, executive director at Satyam Balajee, African rice importing countries purchase 100 percent broken white rice since it is not expensive. But lately, Asian rice buyers such as Vietnam and China have started purchasing 100 percent broken white rice and are paying a premium over rice prices paid by African rice importers. China, the world’s top rice-producing country imported rice from India for the first-time last Dec’20. One rice trader said that China is purchasing 100 percent broken white rice for noodles as well as for animal feed. The international rice market was also cut back by drought in Southeast Asia which caused rice exports from No.2 and No. 3 rice exporting countries Thailand and Vietnam to fall more than a quarter in Jan’20 through Nov’20 compared to the same period in the year 2019.
Indian Parboiled rice export witnessed a flat tone for the previous week with many rice traders holding rice offers as speculation around sea freights adjustment was seen. Many rice exporters on the other hand do not agree with this story and feel that the active sea freight price will remain constant for another 3 months. For break bulk rice shipments, the fluidity of firm fixtures at Kakinada/Kandla has also kept the rice trade in check after a prolonged bullish rally. One Indian rice trader said that Asian rice importing countries have been making purchases of 5 percent broken white rice for human consumption and 100 percent broken white rice for animal feed purposes.
In Thailand rice export prices for 5 percent broken rice increase a little to $520-$526 per MTS from $520-$525 per MTS from the previous week. One rice exporter said that the exchange rate continues to be the main reason behind high rice prices compared to its rival countries like India and Vietnam, which has subdued international rice demand, while rice supply continues to be stable.
Vietnam's rice export prices for 5 percent broken white rice were unchanged at $500-$505 per MTS. One rice trader said that local rice prices are still high, and they expect rice prices to decrease when the rice harvest is in full turn. Rice exporters are purchasing moderately from rice farmers while waiting for the ongoing winter-spring rice harvest to the peak.
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