With harvest complete, all focus has turned to selling this year’s augmented crop. The frenzy of the Brazil business has now subsided, and traders are now looking to the Iraq Grain Board for a tender announcement.
While paddy exports still remain behind schedule, the pent-up demand to Mexico is finally coming to bear which should help move the market along. The milled business to Haiti has been on schedule but won’t be enough to compensate for the slower domestic demand on account of school, restaurant, and travel restrictions throughout the country because of COVID.
The outlook remains positive, but that could change if we don’t see business materialize to Iraq in the near term.
In Asia, Vietnam continues to be pounded by terrible flooding, significantly impacting their ability to export. This has resulted in increased pricing from the origin, further distorting the price difference from Thailand.
Available supplies in Vietnam have thinned at a time when millions of people in central Vietnam have been affected by these floods and landslides. India continues to work through the COVID-caused logistical issues, offering the lowest prices, and supplying the majority of African demand.
Export sales saw a major boost this week with net sales reaching 121,500 MT. Most of this activity is attributed to Haiti where demand had been slow, but fortunately is now picking up. Japan is the other cause for the spike in sales, as this destination moves thru its tender season.
The robust demand to Central American will likely be sustained throughout the marketing year, as this region’s other favorite origin, Brazil will be unable to compete against US rice in 2020/21 and possibly even 2021/22. This is perhaps most clearly seen in the year to date demand in Costa Rica which is nearly twice what it was at this time last year.
Growers continue to look for price discovery in the cash market, but bids remain scarce as buyers struggle to determine the market direction in the immediate future. There has been little to no movement since harvest by way of cash prices.
Futures have a reflected a similar trend with open interest right in line with the 3-month average and the November contract basically flat since the beginning August. The appears poised to make a move, and we expect to see more price discovery take place in the weeks ahead as traders convert export sales to shipments.
First Shipment Import of U.S. Rice to China Since Rice Protocol Established by USRPA and GACC
The first U.S. rice shipment arrived in Xiamen in Fujian Province of China this week thanks to two decades-long joint efforts by USDA FAS, US-China government authorities, and two rice industry organizations USPRA and USA Rice. The exciting news came along with the ongoing implementation of Phase 1 of the Chinese Trade Agreement.
Rice News on AgFax
The US Rice Producers Association has remained in contact with the importer Xiamen Mingsui Grains & Oil Trading Co. Ltd, who is the first importer that struck a deal with ADM and further distribute to a high-end food chain, Sungiven, 20 tons of Calrose rice. The container of 5kg packages of medium grain rice arrived at the Chinese port and cleared customs smoothly according to the importer.
A group of Chinese importers, including Xiamen Mingsui, visited U.S. rice states last December on a USDA reverse trade mission organized by USARF. Several staff and representatives of the US Rice Producers Association joined the group in Louisiana and California where they met with importers and presented cooked rice samples.
On a follow-up contact with the importer in May, Xiamen Mingsui mentioned that the conversation of potential import of 20 tons of Calrose was in progress with ADM. USRPA continued open communications with USDA staff in the Beijing embassy in an effort to facilitate the transaction. Despite the fact that both USDA and USRPA did offer assistance, the importer decided to continue on their own with ADM given the size of the business.
Although there is still a dispute on the category of medium and long grain U.S. rice based on the Chinese rice code, the first medium grain was imported under long-grain due to its width-to-length ratio.
“The first commercial US rice shipment to China clears customs this week. China is the world’s top rice consumer-expect to build on this sale w/much more in the future. This is a good first step to what we hope to be many more shipments of high quality, nutritious & affordable U.S. rice,” said Secretary of Agriculture Sonny Perdue.
USRPA President & CEO, Dwight Roberts added, “China is a fascinating market and our more than twenty years of development work will generate even more opportunities for our farmers and mills.”
The US Rice Producers Association was the first rice organization that began researching the Chinese rice market over two decades ago. USRPA delegates traveled to China numerous times with the Emerging Markets Program funding to conduct a market study of both medium and long grain rice.
The study indicated there was a demand for U.S. grown rice in China. USRPA then met with and initiated protocols with the General Administration of Customs of China (formerly called AQSIQ). USRPA’s efforts led to a visit of several U.S. rice mills by Chinese authorities to finalize the protocol.