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Global Markets: Rice – South America Threatens U.S. Paddy Export Dominance

Ernst Undesser
From USDA December 13, 2017

Global Markets: Rice – South America Threatens U.S. Paddy Export Dominance

Over 40 percent of U.S. rice exports (product weight basis) are paddy rice, which differs from world market trade as the top Asian exporters almost exclusively ship milled rice.

This feature is attributable to two factors: U.S. milled rice prices tend to be higher than respective Asian prices, making it difficult for U.S. rice to compete in Asian markets; and the majority of U.S. rice flows to Western Hemisphere markets, many of which have mills that can easily process domestic and imported rice, as well as policies that support their milling industry.

A decade ago, the United States had a near-monopoly of the paddy trade in the Western Hemisphere, with other regional suppliers as marginal actors. While the United States is still the primary paddy supplier, Brazil, Guyana, Uruguay, Paraguay, and Argentina are now adding greater competition.

In 2011, abnormal growing conditions caused chalkiness in U.S. rice kernels, and some unsatisfied Central American buyers began to buy from South America, especially from Brazil.

In 2014 as petroleum prices plummeted, Guyana’s trade with its neighbor and primary buyer, Venezuela, abruptly dropped. Consequently, Guyana has been pressing into other paddy markets.

Most notably, since July this year, Guyana has shipped over 50,000 tons to Mexico, accounting for 7 percent of paddy imports year-to-date. This is the top paddy rice market in the Western Hemisphere, and had been supplied exclusively by the United States.

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The newest emerging paddy exporter is land-locked Paraguay, where production has more than quadrupled over the past decade. Currently, its paddy exports are largely focused on supplying Brazil via border trade.

In aggregate, these South American suppliers pose a new dynamic in paddy trade in the Americas, creating much fiercer competition for the paddy market that had previously been almost exclusively the U.S. domain.

Further abroad, as Egypt’s exports have dwindled, the United States has vied with Russia and the European Union for Mediterranean medium-grain paddy markets, particularly Turkey.

Full report.

Ernst Undesser
From USDA December 13, 2017