Rice Commentary: Blends Increase Competitive Pricing
Rice farmers in the US continue to express concern about market developments in Mexico. The number one market for US long grain is facing stiff competition from SE Asian suppliers.
The fact is that at least 30% of the market is for high quality rice, represented by the fact that Uruguayan milled rice with its high amylose, low chalk varieties has reached sales of over 40,000 tons per year. Uruguayan milled prices delivered to Mexico are on par with US milled prices ($610/ton aprox Laredo).
Mexican consumers increasingly demand higher quality although the market is largely price driven. Similar to other markets, eye appeal is the number one factor when a Mexican consumer makes a purchase decision. Sources tell USRPA that 5% of Vietnamese rice sold in the Wholesale Market and other areas is many times labeled as Uruguayan or other origin.
The mixing and blending of rice has always been an important game to play in the competitive market. Ironically many of the varieties grown in Uruguay have their origin in the United States and we expect there will be a tendency to return to more “product” than commodity, especially if we are going to compete with such strong competition.
In April, Mexico imported 65,655 MT of rice, of which 42,658 MT (65%) was rough rice from the US, and 21,277 MT of milled rice. The milled rice was reported to have originated in Thailand, Uruguay, Vietnam, and the US. Our sources report that Vietnam and Thailand rice continues to be offered aggressively to wholesalers and packers in Mexico at price levels that are $150-$200 per ton lower than US product.
After a strong start for the week, the ICE Dec contract encountered weakness following the dissemination of strong US export sales data, ultimately giving up 150 points on the week,