Global Markets: Rice – Trade Contracts on Low Exportable Supplies

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Global rice trade is forecast down in 2020 during a chaotic trading year impacted by export restrictions at the beginning of the COVID-19 pandemic and by reduced supplies in Thailand. Limited exportable supplies and relatively high prices are some key drivers of the global contraction of trade.

The exporter with the sharpest decline is Thailand. Exportable supplies have been limited by a poor Thai crop which was affected by drought. Thai prices have been consistently higher than its regional competitors.

However, Thai exports did have a brief window of opportunity when Vietnam, Cambodia, and Burma instituted export bans and quotas in the spring. With these restrictions having lasted only a couple of months, Thai exports have since faltered following these competitors’ re-entry into the market.

Thailand is forecast to export only 6.5 million metric tons (MMT) in 2020, its lowest since 1998. Vietnam is now projected as the second-largest global exporter, despite its ban earlier in the year.

A strong past few month of exports from Brazil has partially offset declines in Southeast Asian exports. Brazil’s year-to-date exports are two-thirds higher than what they were at this point last year.

Brazil has exported to a diverse group of markets, particularly in the Western Hemisphere, as the other major supplier, the United States, has tight supplies and high prices. India, with robust exportable supplies, is expected to remain the top exporter despite earlier logistical constraints.

Meanwhile, global import demand has weakened, most notably in West Africa in response to relatively high world prices. Nigeria is forecast to import a little more than half of what it did in 2019. Cote d’Ivoire, a major regional importer and re-exporter, is expected to import about a quarter less rice than last year.

As global prices have soared, Cote d’Ivoire has relied on its existing stocks as well as other staple crops, such as cassava, in lieu of importing new rice. China’s imports have also remained sluggish in 2020 amid ample domestic supplies and earlier export restrictions by some trading partners.

Likewise, Indonesia’s imports are forecast to remain relatively low due to a large crop.

Parboiled Rice Exports Decrease, Particularly to West Africa

Parboiled rice typically accounts for roughly one-sixth of rice trade, but exports of this type have tumbled in 2020 with a remarkable contraction in shipments to West Africa. Rice is parboiled when it is soaked and steamed while still in the husk. It is then milled and when cooked has more separate grains and more nutrients retained in the grains.

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Parboiled rice trade is dominated by two major players—India and Thailand, with the United States and Brazil accounting for a small fraction of the trade. Parboiled rice typically accounts for a third of Indian exports and a quarter of Thai exports, though the proportion has declined in 2020.

Import markets include Bangladesh, some Middle Eastern countries, and several African countries. Parboiled rice is particularly popular in West Africa, where more than a third of both Thailand’s and India’s parboiled rice is traditionally exported.

In the past 3 years, India and Thailand parboiled rice exports have declined by 30 percent, initially with a decline in imports by Bangladesh, but now more recently with reduced trade to West African countries.

Historically, Nigeria has been the largest importer of parboiled rice in West Africa. Over the past few years, imports arriving directly through Nigerian ports have diminished as the country has sought greater self-sufficiency and has imposed several trade measures inhibiting direct trade.

Neighboring countries have begun serving as ports of entry for parboiled rice. Arrivals through these neighboring countries have largely offset the decline in rice shipped directly to Nigeria over the past couple of years; however, rice arriving in Nigeria and surrounding ports both began to sharply decline beginning in October 2019.

Imports by this region in the first 4 months of the year were remarkably lower than in all preceding years. The combination of various trade policies, economic conditions stemming from lower oil prices, and more intense border checks (heightened amid COVID-19), have led to lower imports through the nearby countries and ultimately on to Nigeria.

As a result, Nigerian rice imports are forecast at the lowest level in about 20 years.

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