13th May (Wednesday), 2015 Daily Global Rice E-Newsletter by Riceplus Magazine

Why is China Barring Cross Border Rice Imports from Vietnam?

May 12, 2015

The Chinese authorities have reportedly tightened control over unofficial rice imports from Vietnam since mid-April this year and there has been no respite so far, according to local sources. During the last week of April, local sources reported that nearly 30,000 tons of rice is understood to be stuck at border gates and faces risk of decay as it is exposed to all kinds of weather conditions.Experts say, the inherent logic behind the Chinese adopting such a strategy is to put a downward pressure on Vietnamese rice prices. They say China, which has a huge demand for rice, cannot refuse rice from Vietnam. They noted that China has been importing rice from Cambodia though it has stopped importing rice from Vietnam. This proves that China still needs rice to meet local demand.

A leading Vietnamese rice expert told local sources that Vietnamese rice exporters often prefer cross-border exports because of lesser quality checks at the borders. He says they often sell the low-quality rice variety 50404 at low prices via borders to Chinese importers. They cannot sell this rice through official channels due to low quality. He expressed doubt if the Chinese authorities are taking advantage of the Vietnamese exporters' situation.Another rice market analyst suggested that Vietnamese rice exporters should not bend to the Chinese strategies. “Vietnam needs to take initiative in the trade with China. It must not entreat favors. Chinese want Vietnam’s rice because it cannot find better suppliers,” he was quoted as saying.

However, exporters told local sources that the Chinese authorities are keen on collecting tax on rice imports from Vietnam. The Chinese importers are understood to prefer importing rice through borders rather than through official channels to cut costs. For instance, if they import rice through official channels, they need to pay an extra amount of about $160 per ton, including a quota fee of $80 per ton, VAT and import tax. That means, for Viet 5% rice, which costs $355 per ton will cost importers about $515 per ton.The Vietnam Food Association (VFA) data shows that of the 6.3 million tons of rice exported by Vietnam last year, nearly 2 million tons had been exported through borders.

Oryza Afternoon Recap - Chicago Rough Rice Futures Continue to Tumble as USDA S&D Increases Carryover Stocks for Both Old and New Crop

May 12, 2015

Chicago rough rice futures for Jul delivery settled 16.5 cents per cwt (about $4 per ton) lower at $9.445 per cwt (about $208 per ton). The other grains finished the day lower following the release of what was interpreted as a bearish USDA S&D update; Soybeans closed about 1.9% lower at $9.5550 per bushel; wheat finished about 0.1% lower at $4.8050 per bushel, and corn finished the day about 0.3% lower at $3.5700 per bushel.U.S. stocks traded mildly lower, paring sharp losses on Tuesday as investors found some relief from a slight recovery in the bond market. Dow Jones Industrial Average briefly turned positive and traded about 5 points lower after plunging 180 points in the open. In the first of three bond auctions for the week, the Treasury Department auctioned $24 billion of 3-year notes at a high yield of 1%. The bid-to-cover ratio, an indicator of demand, was the highest since February. The Dow transports briefly fell more than 1 percent, with all constituents under pressure as oil extended gains on OPEC's forecast for increased demand.

The rise came despite Goldman Sachs' morning note that said the rally in oil prices was premature and itself preventing a decrease in oversupply. Analysts said the U.S. bond market movements was mostly triggered by the selloff in German government debt. The 10-year bund yield traded near 0.68%, a 22% increase for 2015 but still 13% below 6-month highs. European equities slid on Tuesday, with the benchmark German DAX index about 2% lower. Greek Prime Minister Alexis Tsipras on Tuesday called on lenders to break an impasse in cash-for-reform talks. Earlier, Greece emptied an emergency IMF holding account to repay 750 million euros ($839 million) due to the international lender, a Greek central bank official said in a Reuters report. The move avoided default but underscored the dire state of the country's finances. San Francisco Federal Reserve President John Williams said in prepared remarks for a Harvard Club address that raising rates "a bit earlier" allows the Fed to increase rates more gradually.

 Of the little economic data due Tuesday, the Job Openings and Labor Turnover Survey showed job openings down slightly and new hires little changed in March. The Dow Jones Industrial Average traded down 5 points, or 0.03%, at 18,099. The S&P 500 traded down 3 points, or 0.13%, at 2,102, with materials leading seven sectors lower and energy leading three sectors higher. The Nasdaq traded down 3 points, or 0.07%, at 4,990. Gold is trading about 0.7% higher, crude oil is seen trading about 1.8% higher, and the U.S. dollar is seen trading about 0.5% lower at about  1:00pm Chicago time.Monday, there were 645 contracts traded, up from 436 contracts traded on Friday. Open interest – the number of contracts outstanding – on Monday increased by 24 contracts to 11,095.

FAO Estimates Malaysia 2014-15 Rice Imports to Increase to Over 1.1 Million Tons

May 12, 2015

The UN's Food and Agriculture Organization (FAO) estimates Malaysia 2014-15 (July - June) rice imports to increase to over 1.1 million tons and increase to average level from last year's low level due to strong consumption demand and the government's efforts to replenish stocks. In 2014, Malaysia's rice imports increased about 24% y/y from their below-average level in 2013.It estimates Malaysia's total cereal imports, including rice, to increase about 6% to around 6.4 million from around 5.99 million tons last year.

The FAO estimates Malaysia's 2015 paddy rice production at a record 2.6 million tons (around 1.69 million tons, basis milled), slightly above last year's production of about 2.5 million tons (around 1.62 million tons, basis milled) due to favorable weather conditions and continued government support to the rice sector, including subsidies for agricultural inputs.USDA estimates Malaysia to produce about 2.769 million tons of paddy (around 1.8 million tons, basis milled) and import around one million tons of rice in MY 2014-15 (January 2015 - December 2015).

Global Rice Quotes

May 12th, 2015

Long grain white rice - high quality

Thailand 100% B grade   380-390                ↔

Vietnam 5% broken        350-360                ↔

India 5% broken               370-380                ↔

Pakistan 5% broken        390-400                ↔

Myanmar 5% broken      415-425                ↔

Cambodia 5% broken     430-440                ↔

U.S. 4% broken                 480-490                ↔

Uruguay 5% broken        565-575                ↔

Argentina 5% broken     555-565                ↔

Long grain white rice - low quality

Thailand 25% broken      350-360                ↔

Vietnam 25% broken      330-340                ↔

Pakistan 25% broken      345-355                ↔

Cambodia 25% broken   410-420                ↔

India 25% broken             345-355                ↔

U.S. 15% broken               470-480                ↔

Long grain parboiled rice

Thailand parboiled 100% stxd     370-380                ↓

Pakistan parboiled 5% broken stxd          390-400                ↔

India parboiled 5% broken stxd                 360-370                ↔

U.S. parboiled 4% broken             555-565                ↔

Brazil parboiled 5% broken          570-580                ↔

Uruguay parboiled 5% broken    NQ         ↔

Long grain fragrant rice

Thailand Hommali 92%   875-885                ↔

Vietnam Jasmine             490-500                ↑

India basmati 2% broken              NQ         ↔

Pakistan basmati 2% broken       NQ         ↔

Cambodia Phka Mails     815-825                ↔

Brokens

Thailand A1 Super            315-325                ↔

Vietnam 100% broken   305-315                ↓

Pakistan 100% broken stxd          290-300                ↔

Cambodia A1 Super        350-360                ↔

India 100% broken stxd                 270-280                ↔

Egypt medium grain brokens      NQ         ↔

U.S. pet food     370-380                ↔

Brazil half grain NQ         ↔

All prices USD per ton, FOB vessel, oryza.com

FAO Forecasts Laos 2015 Paddy Rice Production to Increase 3% y/y to 3.4 Million Tons

May 12, 2015

The UN's Food and Agricultural Organization (FAO) forecasts Laos 2015 paddy rice production at around 3.4 million tons (around 2.1 million tons, basis milled), up about 3% from last year's average level of around 3.3 million tons (around 2 million tons, basis milled) last year.In April, the FAO reported that planting of the 2015 main (wet) season paddy crop (May - December) will begin in mid-May and will continue till July.

According to USDA, usually Laos imports around 10,000 tons or rice to meet the local annual consumption demand of around 1.58 million tons. However, this year, FAO forecasts Laos to be self-sufficient in rice production without the need to import rice.Laos is in fact aiming to increase rice production by around one million tons and become an exporter of rice by 2015.

USDA estimates Laos' MY 2014-15 (January 2014 - December 2014) paddy rice production to increase about 5.8% to around 2.46 million tons (around 1.55 million tons, basis milled) from an estimated 2.325 million tons (around 1.465 million tons, basis milled) in MY 2013-14. It estimates Laos to import around 10,000 tons of rice in 2015, down about 50% from last year.

FAO Forecasts Sri Lanka Rice Imports to Return to Average Levels in 2015

May 12, 2015

The UN's Food and Agricultural Organization (FAO) is forecasting Sri Lanka's rice imports to return to normal level in 2015 due to an expected recovery in this year's rice production. It estimates Sri Lanka's 2015 rice imports at around 150,000 tons, down about 75% from last year's high level.The FAO has forecasted Sri Lanka's total paddy at around 4.1 million tons in 2015 (around 2.7 million tons, basis milled), up about 21% from an estimated 3.4 million tons (around 2.3 million tons, basis milled) in 2014.

Harvesting of the 2015 main season Maha rice crop (September - March), which accounts for about 65% of annual production, was completed in April. The FAO estimates output from this crop at around 2.7 million tons (around 1.78 million tons, basis paddy), up about 19% from last year's 2.27 million tons (around 1.5 million tons, basis paddy) due to a recovery in planted area as well as adequate supply of irrigation water. Planting for the 2015 secondary season Yala crop (March - September) is underway.

Rice prices continued to decline in April 2015 due to increasing supplies from the 2014-15 main season harvest as well as increased imports in hte previous months. Average retail rice prices stood at around Rs.70,490 (around $530) per ton in April 2015, down about 4% from around Rs.73,410 (around $550) per ton in March 2015.USDA estimates Sri Lanka to produce around 2.85 million tons of rice, basis milled (around 4.19 million tons, basis paddy) and import around 120,000 tons in MY 2014-15 (October 2014 - September 2015).

FAO Estimates Myanmar to Export 760,000 Tons of Rice in 2014-15; Nearly Half of USDA Estimate of 1.6 Million Tons

May 12, 2015

The UN's Food and Agriculture Organization (FAO) forecasts Myanmar's 2014-15 (July - June) rice exports at around 760,000 tons, up about 9% from around 697,248 tons in 2013-14. It estimates Myanmar's 2014-15 total cereal exports at around 1.4 million tons.

The FAO estimates Myanmar's 2015 aggregate paddy production at around 29.2 million tons (18.69 million tons, basis milled), up about 1% from around 28.9 million tons (18.5 million tons, basis milled) in 2014. Planting for the 2015 main (wet) season rice crop, which accounts for about 80% of the annual production is currently underway and the FAO expects normal weather conditions.

Wholesale price of Emata rice, the most commonly used variety, increased for the fifth consecutive month in April due to strong border trade with China. They were also above their year-ago levels.USDA estimates Myanmar to produce around 12.15 million tons of rice, basis milled (around 18.98 million tons, basis paddy) and import around 1.6 million tons in MY 2014-15 (January 2015 - December 2015).

India Gurus Advise Rice Farmers to Prepare for Insufficient Rains, as Australian Weather Service Projects El Nino

May 12, 2015

This year’s monsoon rains in India may be below normal.  So far, India’s weather service has projected the season rains will start on schedule, June 1. However, Australia’s weather service today declared that this year will see a strong El Nino for the first time since 2010 and a strong El Nino is typically associated with below normal monsoon rains in India.In India, the Sikh religion's gurudwaras, are pitching advice to paddy farmers on which crops to plant and encouraging them to conserve water in the Kharif (summer/fall) crop season to equip themselves for a potentially weak monsoon this year.

In addition, India’s Punjab state officials are working with researchers, millers and exporters to provide technical and advisory services to farmers.Gurudwaras are seen as one of the viable means to communicate with the farmers and crop sermons have become regular to enlighten the farmers during gurudwara sessions. Exporters and millers are pushing farmers to cultivate short-duration basmati as it takes fewer days for production and consume less water than the regular rice paddy. In light of weak or unpredictable rains this year, it has become necessary to provide in advance short-duration and drought-resistant seed varieties to farmers. Efforts are being made to send timely messages to farmers on types of seeds to purchase locations to procure seed, and exact quantity to plant per hectare. Farmers are also being advised to defer paddy transplanting by a week to June 15.India’s weather office is expected to provide its next monsoon projections on May 15.

Korea-Canada FTA Excludes Rice from Duty Concessions, Says USDA Post

May 12, 2015

The Korea-Canada Free Trade Agreement (FTA), which came into effect from January 1, 2015 excludes rice from duty concessions, according to the USDA Post. Beef (frozen/carcass and half carcass), chicken (frozen),  duck (frozen), skim whole milk powder, cheese, pine mushroom, shiitake, chestnut, tangerine, ginseng, red pepper paste and leaf tobacco are other products that are excluded from duty concessions under the FTA.

Approximately 97.5% of all products traded between Canada and Korea are set to become duty-free in the next ten years. Specifically, 98.7% of Canada's imports from Korea and 98.4% of Korea's imports from Canada will become duty-free in the next ten years.

Korea is a major importer of wheat from Canada and the FTA is expected to increase the competitiveness of Canadian milling wheat in Korea as the import duty is understood to go down from 1.8% to zero. Similarly Canadian pork is expected to become competitive in Korea as the import duty may go down by about 2-5%, and Canadian rapeseed oil is expected to dominate the Korean market as the duty is reduced to zero from 10%.

The government of South Korea has opened its rice import market from the beginning of this year ending its 20-year import quota system. It decided to impose a 513% tariff on rice imports over and above its mandatory rice imports of 408,700 tons under the World Trade Organization (WTO) minimum market access (MMA) quota. The government is keen on protecting the local rice market from cheap imports.

Oryza U.S. Rough Rice Recap - Softer Market as Old Crop Long Grain Ending Stocks Inch Higher; 2015/16 Ending Stocks More Than Double y/y

May 12, 2015

The U.S. cash market was slightly weaker today after the USDA WASDE report showed a bearish outlook for U.S. long grain prices but a more favorable global outlook .Today the USDA increased their old crop long grain ending stocks by 0.5 million cwts (22,680 tons) on account of increased long grain imports which in turn pegged ending stocks at 28.1 million cwts (1.27 million tons).

As for new crop, the USDA pegged long grain production at 162.0 million cwts (7.35 million tons), down 0.4 million cwts (18,144 tons) from than last year, imports at 21.0 million cwts, up 0.5 million cwts (22,680 tons) from last year, and exports at 76.0 million cwts (3.45 million tons), up 3.0 million cwts (136,078 tons) from last year, and domestic and residual usage at 101.0 million cwts (4.58 million tons), also up 3.0 million cwts (136,078 tons) from last year.This is in turn put next year’s long grain ending stocks at 34.1 million cwts (1.55 million ton) or 6.0 million cwts (0.27 million tons)  more than last year and 17.9 million cwts (0.81 million tons) more than the 2013/2014 marketing year. 

Thailand Rice Sellers Lower Some of Their Quotes; Vietnam Rice Quotes Mixed Today

May 12, 2015

Thailand rice sellers lowered their quotes for parboiled rice by about $5 per ton to around $370 - $380 per ton today . Vietnam rice sellers increased their quotes for Jasmine rice by about $10 per ton to around $490-$500 per ton and lowered their quotes for 100% broken rice by about $5 per ton to around $305 - $315 per ton. Other Asia rice sellers kept their quotes mostly unchanged.

5% Broken Rice

Thailand 5% rice is indicated at around $370 - $380 per ton, about a $20 per ton premium on Vietnam 5% rice shown at around $350 - $360 per ton. India 5% rice is indicated at around $370 - $380 per ton, about a $20 per ton discount to Pakistan 5% rice shown at around $390 - $400 per ton.

25% Broken Rice

Thailand 25% rice is shown at around $350 - $360 per ton, about a $20 per ton premium on Vietnam 25% rice shown at around $330- $340 per ton. India 25% rice is indicated at around $345 - $355, on par with Pakistan 25% rice shown at around $345 - $355 per ton.

Parboiled Rice

Thailand parboiled rice is indicated at around $370 - $380 per ton, down about a $5 per ton from yesterday. India parboiled rice is indicated at around $360 - $370 per ton, about a $30 per ton discount to Pakistan parboiled rice shown at around $390 - $400 per ton.

100% Broken Rice

Thailand broken rice, A1 Super, is indicated at around $315 - $325 per ton, about a $10 per ton premium on Vietnam 100% broken rice shown at around $305 - $315 per ton, down about a $5 per ton from yesterday. India's 100% broken rice is shown at around $270 - $280 per ton,  about a $20 per ton discount to  Pakistan broken sortexed rice shown at around $290 - $300 per ton.

Vietnam's Rice Exports to Africa May Recover in 2015, Says MOIT

May 12, 2015

Vietnam's rice exports to Africa, which declined about 58% y/y in 2014, are showing signs of recovery, according to the Department of Africa, West Asia and South Asia Markets under the Ministry of Industry and Trade (MOIT).Based on the export data for the first quarter of 2015, the Department noted that Vietnam's rice exports to African countries such as Ghana, Ivory Coast and South Africa have increased considerably in this year. It noted that total rice exports to African destinations so far this year have earned about $67 million in the first three months of this year.

According to USDA data, Vietnam's rice exports to African countries declined to around 772,537 tons in 2014 from around 1.83 million tons in 2013 due to a stiff competition with Thailand and India. However, Vietnam's rice exports to Africa in the first three months of 2015 stand at around 164,255 tons, a 95% increase from around 84,289 tons exported during the same time last year.Ministry sources told local reporters that the Department has submitted to MOIT a plan to further increase rice exports to Africa. The plan includes opening bonded warehouses in Africa's major markets such as Angola, Ivory Coast and Cameroon. The Department is reportedly keen on increasing direct exports to these markets while avoiding intervention of third party promotion. If the plan is approved, local sources say, Vietnam's rice exports to African destinations may surge further this year.

The Ministry has also reportedly advised exporters to focus on selling high-quality rice products as part of efforts to build a rice brand name for the country.Vietnam exported about 1.555 million tons of rice in first four months of calendar year 2015, down about 11% from about 1.758 million tons of rice exported during same time last year, according to data from the Vietnam Food Association (VFA). Average rice export price so far in this year stands at about $419 per ton (FOB), down about 3.7% per ton from same time last year.Last month, the government lowered the floor price (minimum export price) of the lower quality 25% broken rice exports to around $340 per month, down about 3% from around $350 per ton due to subdued demand for Vietnamese rice.

Thailand Plans to Seal More G2G Contracts in 2015, Says Government Spokesperson

May 12, 2015

The government of Thailand is planning to seal more government-to-government (G2G) contracts with foreign partners as part of efforts to promote Thai rice, according to local sources.Government Spokesperson told local sources that the Commerce Ministry is working towards stabilizing rice prices and increasing exports. The Commerce Minister is leading a delegation of rice exporters to various countries and organizing marketing campaigns and sales activities to persuade the respective governments to buy Thai rice.Responding to the private sector's concerns over relatively high prices of Thai rice, he noted that Thai rice is still in high demand despite relatively high prices.

He added that increasing supplies from Vietnam and India have led to a decline in their prices while Thai rice prices have remained firm due to drought and a stronger baht.He also encouraged rice producers to improve the rice quality amid growing demand for high quality rice both domestically and globally.Separately, the Director-General of the Department of Foreign Trade told reporters that the Department would decide over resuming rice sales from stockpiles after the Rice Policy Committee meeting on May 18, according to Bloomberg. The government had stopped rice sales from stockpiles to avoid fall in prices.The Thai government is confident of eporting over 10 million tons of rice this year despite the lingering concerns over prices and subdued demand. Thailand exported 3.3 million tons of rice between January  and April 2015, down about 1.3% from around 3.8 million tons exported during the same period last year, according to the TREA.  

Oryza Overnight Recap – Chicago Rough Rice Futures Continue to Slip as Market Faces Lack of Demand

May 12, 2015

Chicago rough rice futures for Jul delivery are currently seen trading 6.5 cent per cwt (about $1 per ton) higher at $9.545 per cwt (about $210 per ton) during early floor trading in Chicago. The other grains are seen trading mostly higher; soybeans are currently seen about 0.4% higher, wheat is listed about 1% higher and corn is currently noted 0.3% lower.U.S. stocks traded sharply lower on Tuesday as the continued gains in bond yields kept investors on edge. Dow Jones Industrial Average briefly lost more than 150 points in the open. The major indices declined, with the Nasdaq off 1%.

The S&P 500 also fell more than half a percent as information technology led 9 sectors lower. Earlier, the Dow futures briefly fell about 140 points. European equities slid in trade on Tuesday, with the benchmark German DAX index around 2.2% lower. Greece emptied an emergency IMF holding account to repay 750 million euros ($839 million) due to the international lender, a Greek central bank official said in a Reuters report. The move avoided default but underscored the dire state of the country's finances.

The selloff in bonds, which paused last Thursday and Friday, accelerated Monday afternoon and continued into Tuesday's morning trade. Despite the decline in equities, most analysts note that the major indices remain near records and are confident in the stock market's longer-term ability to move higher. Gold is currently trading about 0.7% higher, crude oil is seen trading about 1% higher,  and the U.S. dollar is currently trading about 0.7% lower at 9:15am Chicago time

Vietnam Rice Exports to Asian Destinations Increase Five Fold in March 2015

May 12, 2015

Vietnam has exported around 613,164 tons of rice in March 2015, about 3.3 times more from around 182,400 tons exported in February 2015, and up about 4% from around 590,329 tons exported in March 2014, according to USDA. While share of Vietnam's rice exports to Asia, Africa and Americas increased m/m in March 2015, its share of exports to Europe and Australia declined m/m during the month.

Asia accounted for around 536,838 tons (about 87.5% of total rice exports by Vietnam in March 2015), about 5 times more than 112,818 tons exported in February 2015 and up about 16% from around 464,111 tons exported in March 2014.

Vietnam exported around 34,545 tons of rice to Africa (about 6% of total March 2015 exports), about two times more from around 14,798 tons exported in February 2015, and down about 27% from around 47,297 tons exported in March 2014.

Vietnam exported around 37,255 tons of rice to American destinations (about 6% of March 2015 exports), up about 11% from around 33,587 tons exported in February 2015, and down about 41% from around 62,726 tons exported in March 2014.

Vietnam's exports to Australia (about 0.2% of March 2015 exports) declined by about 56% to around 1,618 tons in March 2015 from around 3,659 tons exported in February 2015 and declined by about 7% from around 1,745 tons exported in March 2014.

Vietnam's exports to Europe and CIS countries (about 0.4% of total March 2015 exports) accounted for around 2,908 tons, about 83% lower than around 17,538 tons exported in February 2015 and about 80% below than around 14,450 tons exported in March 2014.

In terms of grade, 5% broken rice exports accounted for around 100,567 tons (or, about 16% of total March 2015 exports); Jasmine rice exports accounted for around 71,220 tons (or, about 12% of total March 2015 exports); 15% broken rice exports accounted for around 179,782 tons (or, about 29% of total exports in March 2015); 25% broken rice exports accounted for around 114,635 tons (or, about 19% of total exports in March 2015); glutinous rice exports accounted for around 35,328 tons (or, about 6% of total March 2015 exports); and 10%, 100% and other varieties accounted for around 111,632 tons (or, about 18% of total exports in March 2015).

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13th May (Wednesday),2015 Daily Exclusive ORYZA Rice E-Newsletterby Riceplus Magazine