Rice Market: New U.S. Trade Opportunities in 2020, 2021

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    Global weather issues and panic-buying induced by COVID-19 have exhausted local supplies of rice throughout many heavy rice-consuming countries in 2020.  This environment has presented unique export opportunities for U.S. rice, just as America’s new crop is ready to hit the market.

    Export powerhouses like India and Viet Nam have dropped pandemic-related export restrictions and maintain supply surpluses, so U.S. rice will still face competition in key export markets but changing global dynamics could benefit the U.S. rice industry this year and next.

    In recent weeks, drought in South America has led Brazil to open a temporary duty-free quota for 400,000 MT of rice.  While it remains to be seen whether Brazil will be more than a short-term market, their aggressive interest in U.S. rice indicates the great need for rice there, typically satisfied by their MERCOSUR neighbors.

    As it stands, 120,000 MT of U.S. rice is slated to head to Brazil over the coming weeks, and there is already unofficial talk of a new quota being opened for 2021.

    Weather hasn’t only affected the Western Hemisphere.  An ongoing drought in Australia means that domestic rice supplies there will not last through the end of 2020.  Annual U.S. exports to Australia are typically around 10,000 MT but Australian producers are strong U.S. competitors in markets such as Taiwan, South Korea, and Israel.

    Their reduced exports or absence in these markets will be notable, particularly in the West Bank/Israel where USA Rice began promotional activities in 2019 and has already seen significantly increased market share from 5 percent ($9.8 million) in 2018 to 24 percent ($23.7 million) in the first six months of this calendar year. Israel is now the tenth largest export market for U.S. rice based on value.

    Iraq, which imports 1.2 million MT of rice annually, manages a public distribution system which provides the population access to a variety of staple commodities, including three kilograms of rice every two months. They, too, are facing a massive rice shortage.

    Economic challenges due to the low global price of oil have restrained the government’s ability to purchase strategic supplies of wheat and rice; approximately 90 percent of the government’s revenue comes from oil revenue.  The recent ExIm insurance coverage on lines of credit will help with Iraq’s ability to purchase U.S. rice.

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    On the international food aid front, the U.S. has shipped 110,000 MT of U.S. rice (nearly $64 million) in FY20 to help countries provide nutritious food to those in need.  A Food for Progress program, which is utilizing rice in Burkina Faso, will be tendering for an additional 30,000 MT of U.S. rice later this Fall.

    “While world food stocks and production levels for the most widely consumed staples, such as rice, are near all-time highs, the COVID-19 pandemic’s impact on jobs and income has increased the number of food insecure people worldwide, so the demand is strong throughout our commercial and international food aid channels,” said USA Rice President & CEO Betsy Ward.

    “USDA’s most recent figures for global rice trade for 2021 continue to project increased trade tonnage, looking at 44.4 million MT, which equates to a 2 percent bump from 2019 trade levels.”

    Ward added:  “While we continue to supply our traditional global customers with high quality rice, USA Rice will work to capitalize on these new market opportunities and will operate promotional activities dynamically so we can adapt to the changing market opportunities both domestically and abroad.”

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