Rice: Domestic & International Market Fundamentals

Domestic Market Highlights:  

1509 paddy arrival in Shikarpur mandi (U.P) as on 15 September is 1000 bags at US$378.28 per mt. while Sugandha paddy arrival is 300 bags at US$336 per mt. In Philbhit mandi, Govinda paddy arrival is 500 bags at US$328 per mt with 25% moisture content.

All-India progressive procurement of Rice as on 08.09.2017 for 2016-17 was 38.740 million tonnes against the procurement of 34.152 million tonnes in the corresponding period of last year. The procurement of wheat for the rabi marketing season (RMS) 2017-18 was 30.825 million tonnes against the procurement of 22.962 million tonnes in the corresponding period of RMS 2016-17. The total sown area as on 8th September 2017, as per reports received from States, stands at 104.117 million hectare as compared to 104.987 million hectare at this time last year. It is reported that rice has been sown/transplanted in 37.146 million ha, pulses in 13.917 million ha, coarse cereals in 18.343 million ha, sugarcane in 4.988 million hectare and cotton in 12.098 million ha.

Indian FOB for 1121 steam in the month of August moved weak from last month and currently is in the range of USD 998-1000/MT which is down by 4.32% from last month price of USD 1045/T. Average basmati rice price too frail this month with lower demand from international markets, however overall sentiments for basmati rice price remains firm in coming two months till the arrival of new crop which starts from October. According to the UN's Food and Agriculture Organization (FAO), Currently Pakistani basmati FOB is moving weak and now it’s hovering in the range of USD 1125/MT which is also down by 5.85% from last month FOB of USD 1195/MT.

Average weekly wholesale rice prices in India stood at around US$485 per mt in 04th week of August- 2017, firmed about 7.73% from around US$450 per mt in last week, and up about 9.42% from around US$444 per mt a year ago. It is expected that non-basmati rice market to move range bound with firm tone in coming month due to expectation of higher international demand and lower stock.

The Gobindobhog rice, a specialty of West Bengal’s Bardhhaman district, has got the Geographical Indication (GI) status. Gobindobhog was cultivated in an area of 35 hectares last year, and of this, 20 hectares were spread over an area of Raina 1 and Raina 2 blocks. Gobindobhog' is a non-basmati indigenous, aromatic rice of West Bengal being grown in the state for the past 300 years. It is has short white kernels with a good cooking quality and pleasant aroma. The rice is popular in the domestic market as well in Karnataka, Tamil Nadu and Kerala.

Basmati rice has regained its position after MY-2014-15 as the top commodity export from India. The fine rice variety replaced buffalo meat to become the top most export for the April-June quarter. Basmati rice export volume were lower than buffalo meat due to import ban from Iran which is largest basmati rice importer from India, now Iran continuing importing basmati even during its harvest season. Another factor behind Basmati grabbing the top spot in exports is the decline in the export of buffalo meat due to ban on the sale of cattle in mandis hit the buffalo trade. The basmati exports increased from US$968.13 million of last year’s April-June quarter to US$1276.25 million in the same quarter this year.

Rice Fundamental Report

Uttar Pradesh Government decided to give bonus of US$2.5 per mt. on the support price of Paddy so that farmers must get right of their produce. Cabinet increases the paddy MSP by US$12.5 per mt. for both common grade and fine grade variety to US$230 per mt. and US$236 per mt. respectively,

The 4th Advance Estimates of production of major crops for 2016-17 have been released by the Department of Agriculture, Cooperation and Farmers Welfare on 16th August, 2017. As per 4th Advance Estimates, the estimated production of major crops during 2016-17 for food grains is 275.68 million tons and for Rice it is 110.15 million tons.

India’s agri exports for the April-June quarter rose by almost a tenth in dollar terms and 7% in rupee terms on strong overseas demand for products such as basmati rice and guargum. Basmati rice, the largest product in the agri-exports basket, increased buying from Iran during the period. Basmati volumes for the April-June quarter stood at 1.25 million tons, a growth of 6% over last year’s 1.18 million tons.As per by APEDA, besides increased buying from Iran, the higher per unit realization fetched by basmati shipments also contributed to the overall export growth in value terms. As against per ton realization of around $850 last year, basmati rice has commanded an average price of $1009 per ton in the April-June quarter this year. Higher realizations for non-basmati rice have also pushed up the growth in exports of the cereal as volumes saw a marginal dip at 1.72 million tons (against 1.78 million tons).

Price Outlook:  Average Rice price in all India is likely to trade steady to firm tone due to normal demand with lower stock.

International Market Highlight:

According to the Department of Cultivation under the Ministry of Agriculture and Rural Development (MARD), Vietnam is likely to produce 44.1 million tons of rice in 2017. Unfavorable weather conditions shrank winter-spring rice yield by 300,000 tonnes. However, southern localities are estimated to enjoy a surge in rice production of 400,000 tonnes. They have already harvested 1.08 million hectares of rice, or 56.2 percent.

Pakistan rice exports from the country during the month of July, 2017 grew by 34.74 percent as about 200,995 metric tons of rice worth US$ 107.896 million was exported as compared the exports of 164,092 metric tons valuing US$ 83.974 million of same month last year. During the period under review, exports of basmati rice increased by 28.49 percent and reached at 30,951 metric tons worth of US$ 32.990 million. The exports of basmati rice during July, 2016 were recorded at 28,725 metric tons valuing US$ 27.731 million, according the data of Pakistan Bureau of Statistics. Meanwhile, the country earned US$ 74.906 million by exporting about 170,044 metric tons of rice other than basmati rice, which was recorded at 135,367 metric tons valuing US$ 56.24 million of same period last year.

Bangladesh will import 250,000 tonnes of white rice at $453.00 a tonne from Cambodia in a government-to-government deal. The country produces around 34 million tonnes of rice annually but uses almost all its production to feed its population, and often requires imports to cope with shortages caused by floods or droughts. It has so far imported 200,000 tonnes of white rice at $430 a tonne and 50,000 tonnes of parboiled rice at $470 a tonne from Vietnam in a state-to-state deal at rates much higher than in tenders.

Rice Fundamental Report :

USDA increased its global rice ending stocks estimates by 0.398 MMT TO 122.918 MMT for 2017/18 compared to last month due to fall in domestic consumption estimates by 0.263 MMT for 2017/18 compared to last month estimates.

In U.S, 84% crop of rice has headed as of 6th August, 2017, same compared to last year but higher by 12% from last 5 year average period. 9% crop of rice has harvested, up by 1% compared to last year and 4% from last 5 year average period. 72% crop of rice is in good to excellent condition, up by 1% compared to last week.

As per Iraq's Agriculture Ministry, it expected to produce 250,000 tonnes of rice in the 2017 season. The figure suggests gap to be filled by imports of about 1 million tonnes, as demand annually stands at between 1 million to 1.25 million tonnes. The expected production is around 250,000 tonnes for this year, the harvest should start in October.

Due to recent flood and drought in Bangladesh and Sri-lanka respectively, these countries are negotiating an urgent purchase of about 400,000 tons of rice from Thailand to replenish their falling stocks. If the deals are sealed, all rice will be transferred within 60 days and the deal will be secured through government-to-government (G-2-G) contracts. Each country aims to import 200,000 tons of rice – mostly parboiled grade and common grade white rice. The benchmark common grade 5% white rice was quoted at USD 410/T, while parboiled 100 % grade white rice was fetched at USD 439/T. Bangladesh and Sri Lanka normally supplemented their stocks with rice from neighboring Pakistan and India when needed. In 2016, they imported 280 tons and 151 tons of Thai rice, respectively.

Sri Lanka has offered to purchase 500,000 tonnes of high-quality rice from Myanmar through a government-to-government contract. The offer to buy 200,000 tonnes of parboiled rice and 300,000 tonnes of white rice was made last week. Parboiled rice, or converted rice, is rice that has been partially boiled in the husk. Each year, Myanmar exports between 1.5 million and 2 million tonnes of rice, according to the Myanmar Rice Federation (MRF).

According to the Vietnamese Food Association (VFA), Vietnam MY 2016/2017 (January-May 2016) exports reached about 2.3 million tons of milled rice, with the CIF value at $1.1 billion. In the first 5 months of MY 2016/2017, China imported about 1.1 million tons, compared to 786,000 tons of milled rice during the same period of MY 2015/2016. The Philippines’ imports also increased from 193,000 tons in the first 5 months of MY 2015/2016 to 343,000 tons in the same period of MY 2016/2017. The export volumes of rice to these two countries comprise more than 50 percent of Vietnam’s total rice export for the first 5 months of MY 2016/2017.