Global Markets: Rice – Medium- and Short-Grain Trade Overview

Rice harvest spilling into truck. Photo: University of Arkansas

Although the majority of rice traded internationally is long-grain rice, there is a smaller but significant quantity of medium- and short-grain rice. Typically, trade for these classes is relatively stable, with consistent markets around the Mediterranean region and East Asia. However, recent years have included quite a bit of volatility for both the importers and exporters, which has shifted some trading patterns.

Importers

East Asian markets such as Japan, South Korea, and Taiwan made minimum access agreements under the Uruguay Round of the World Trade Organization negotiations in order to maintain relatively high tariffs and protection for their markets.

For years, these countries have been consistent and steady buyers, primarily of medium-grain rice. Japan has recently expanded access for Australia, but only for 6,000 tons in the initial years, rising to 8,400 tons. In 2019, South Korea agreed to country-specific quotas amounting to 388,700 tons, of which the United States has access to 132,304 tons. Taiwan is a small but consistent market.

Other East Asian markets have recently made large purchases. North Korea had a smaller crop of rice in 2018/19 and has been buying steadily since mid-2019, a trend that is expected to continue into 2020. These imports have almost entirely been from China.

China has a tariff-rate quota (TRQ) for 2.66 million tons of medium- and short-grain rice, but it was been largely underfilled since its inception when China joined the World Trade Organization (WTO). Between 2013 and 2017, China sharply boosted its imports under this part of the TRQ, largely glutinous rice from Vietnam. However, after China changed its tariff codes in 2018 and indicated that glutinous rice would enter under the long-grain TRQ, glutinous rice imports plummeted.

For both 2018 and 2019, medium- and short-grain imports remained well below the full TRQ amount. In 2019, the WTO ruled that China must take measures to improve its TRQ administration and the U.S.-China Phase One Agreement included the provision that the WTO ruling would be implemented.

In addition to East Asia, another significant region for medium-grain rice trade is among countries in the Middle East and North Africa around the Mediterranean Sea. Turkey is a significant producer but also imports paddy rice for domestic needs and as part of its inward processing regime, re-exporting a portion as milled rice. For the past several years, Turkey has been the largest importer in the region.

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Egypt emerged as the dominant importer in 2019 at 700,000 tons. This was a notable development since this major medium-grain producer was a significant exporter less than 15 years ago. In 2018, the Egyptian crop was down more than a third compared to the prior year due to government limitations on rice planted area.

To meet domestic demand, Egypt turned to the global market and its imports were primarily from China with smaller amounts from India. With the 2019 crop rebounding to normal levels, demand for imported rice has fallen, with an expectation of only 200,000 tons of imports in 2020.

Exporters

The United States has tended to be the dominant player among medium- and short-grain exporters, with smaller volumes from the European Union, Australia, and China. However, China’s prominence in these classes has expanded significantly over the past couple of years, outpacing the United States. China’s top medium-grain market in 2019 was Egypt, followed by Turkey, North Korea, and South Korea. Both the United States and China have been able to benefit in 2019 from Australia’s relative absence from the market amid its persistent drought.

Looking ahead to 2020, China’s exports are forecast to remain strong, supported by continued auction sales from its large stockpiles. The Chinese old-crop rice is selling around $300/ton and export prices for medium- and short-grain rice are averaging slightly above that, well below the prices of other medium- and short-grain exporters.

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