Rice Market Update: India Exceeds Farmer Supports, Invokes WTO Clause…..Again

    Cash prices in the delta were a little mixed this week as Texas inched higher, but Louisiana moved lower. Prices were largely flat among the other rice-growing states. The USDA’s World Market Price was recorded at $11.42 per cwt, unchanged now for nearly a month.

    Rice acres are slow to be planted in Arkansas at only 26% complete, however, the other states are generally tracking with their historical planting paces. As for rice emerged, the story is the same where all of the states, less Arkansas are right where they need to be.

    Weather conditions in Arkansas have also delayed the planting of corn and soybeans which are both considerably behind schedule. With the exception of a few smaller weather events, the road to planting looks more clear for Arkansas in the upcoming week.

    Earlier this week, news broke that India was invoking the peace clause at the World Trade Organization for the second time as a result of exceeding the 10% ceiling on farmer subsidies. The peace clause protects India against action from WTO members; this shows yet another situation where WTO agreements are breached without recourse.

    India first took advantage of this clause in 2018, and since then other developing countries have exercised the same clause. China has also long been a perpetrator of breaching WTO agreements without facing any significant backlash. Although these clauses exist to provide the exercising nation with food security, it doesn’t take much scrutiny to see how such policy noticeably disrupts and distorts world trade.

    India exports twice as much rice as the next highest exporter in the world, and China’s exports basically match that of the United States. It’s these facts that bring into question the true efficacy of the WTO and its role as the world trade police.

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    In the meantime, India’s export prices for 5% broken parboiled rice fell for a second straight week on a weakening rupee. Ultimately, this has allowed India to experience a spike in export demand. The baht also saw further weakening this week which benefited Thai exporters as prices there slipped a little further this week.

    Futures improved throughout the week but are still just shy of their 4-week high. Open interest was down this week, but the average volume was up considerably. It was a busy week at the ports with 93,000 MT being loaded and an additional 96,800 being reported on the outstanding sales.

    Total export demand for US long grain is still down 11% from last year despite last week’s USDA food aid rice purchases. It would require nothing short of an Iraqi tender to bring demand back into sync with last year’s demand picture.

    Full report.




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