The market is shaking off the holiday cobwebs and beginning to see new life in the new year. The Omicron variant is sweeping across the U.S. and threatening more shutdowns but is having a muted effect on the buying and selling of rice in the U.S. market.
In truth, very little has changed since Christmas, as buyers and sellers are just beginning to resurface. However, there have been some excellent reports from the USDA published in the final week of the year, which will be broken down here.
A GAIN report on Mexico published on Dec. 23, 2021 shows that post is forecasting rice production down from 326,000 MT to 305,000 MT of rough rice in the coming year on account of poor water supplies. Stocks are also expected to end down in the coming year from USDA initial projections; from 243,000 MT to 231,000 MT.
What will be truly significant to the U.S. exporters and farmers is that we sustain—and grow—our market share in Mexico and gain back the ground that has been taken from other origins like Brazil and other exports in South America.
The outlook of the Mercosur exporting countries is bearish. Harvest is underway in Paraguay and maybe a few fields in northern Argentina and parts of Brazil. Lack of sales continue, and the dollar exchange rate has paddy prices at $255-$265 per ton FOB at the loading ports of Rio Grando do Sul, Montevideo, Nueva Palmira, etc. Paraguayan paddy prices are reportedly under well under $200 per ton ex-farm or barge loading site.
Very little activity this time of the year as traders return from holiday at the beaches, however, one very recent farm sale that was done at $236 ex-farm, gives an idea of the situation. Available storage space is expected to be an issue in the weeks ahead. “Rice is no business with these prices,” said one farm/mill operation.
Turning to the far east, a GAIN report on Vietnam published on December 26, 2021, shows a slight decrease in acres for the coming year from 18.162 million acres down to 18.038 million acres, a decrease of only 1%. This negligible reduction in acreage is offset by an expectation of increased yields, resulting in a similar production compared to last year.
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This bodes well for Vietnam, as they were severely impacted by COVID-19 at the port and at the production level. Competition with India has been fierce, and a return to “normal” in Vietnam will be a welcome change for the new year, as exports are expected to beat last year by 1.6%.
In the Middle East, a GAIN report on Pakistan published on January 4, 2022 projects an increased exportable supply from this neighbor to India that has been swallowed by India’s enormous production and export volumes.
Rice exports are expected to reach 4.5 million tons in the coming year, an increase of 15% over last year’s number of 3.9 million tons. This is a result of what Pakistan is reporting as record production that is expected to reach 8.9 million tons.
While rice trade in the far and middle east is tangential to trade in the Western Hemisphere, it is nonetheless important to understand going into the New year. India, the world’s leading exporter, is quoting prices in early 2022 of $360 pmt, and Pakistan is at $370 pmt. In the far east, Vietnam is next in line with quotes approaching $400 pmt, and Thailand leading the pack at $405 pmt.
The first USDA Export Sales report of 2022 shows net sales of 27,600 MT for 2021/2022, which are down 60% from the previous week and 56% from the prior 4-week average. Increases primarily for Mexico (12,600 MT), Haiti (6,900 MT), Canada (4,800 MT), Guatemala (4,000 MT), and Saudi Arabia (600 MT), were offset by reductions for Japan (1,900 MT).
Exports of 53,200 MT were up 70% from the previous week and 9% from the prior 4-week average. The destinations were primarily to Haiti (45,100 MT), Canada (2,800 MT), Mexico (1,700 MT), Honduras (1,000 MT), and Saudi Arabia (800 MT).