The Asian rice market is experiencing a shake-up in exporter market shares as each supplier vies for limited business. Indian rice exports are set to rebound in 2019 as the country maintains its role as dominant supplier. The government sharply increased the Minimum Support Price this year, supporting additional acreage and resulting in a relatively large crop.
Initially this domestic price support pressured export prices higher, but the depreciation of the rupee and the recent implementation of an export subsidy have helped to offset these forces. Government-held stocks are well above the desired buffer stock levels, ensuring ample supplies. Its chief competitor Pakistan is forecast to have marginal declines year to year in exportable supplies.
Thai exports are set to contract more substantially. Carryin stocks are the lowest in a decade, held primarily by the private sector as the government has virtually depleted its stocks. Over the past couple of months, the strengthening baht has kept Thai prices well above other Asian exporters. Thailand is set to engage in intense competition with other Southeast Asian suppliers, so the relatively uncompetitive prices put it at a distinct disadvantage.
Vietnam is expected to make some gains in the coming year. The country is well poised to continue to supply the Philippines, which has been a more active buyer in recent months, and where pending legislation would likely keep imports at robust levels. Likewise, Vietnam will benefit from mid-sized Southeast Asian suppliers Burma and Cambodia losing the duty-free advantage in the European market once afforded by the Everything But Arms agreement.
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In January 2019, the European Union imposed significant import tariffs for these two suppliers, which combined have grown to account for nearly one-third of EU imports. This change will make Vietnamese rice relatively more competitive in the European market, while accelerating Burma and Cambodia’s efforts to diversify to other markets.
The most prominent shifting dynamic in 2019 is expected to be China. While it has dominated global imports for the past 8 years, the country’s demand for foreign rice appears to be waning and stricter controls are being implemented at the border. Meanwhile, the country is reemerging as a significant exporter, shipping volumes not seen in 15 years. Core suppliers to the Chinese market are beginning to diversify away to other markets, only to see Chinese rice competing abroad in several markets at even lower prices.