Normal demand will not clear out record supply--something additional and unexpected is needed. With the bulk of the government food aid business complete, and little new food aid on the radar, it is not yet clear how the U.S. rice industry can clear supplies to a manageable level ahead of the next crop.
The USDA did not change the world market price for the fourth consecutive week in their release on (January 2). The world market price remains $5.40 for long grain, $4.79 for medium grain, $4.76 per cwt for short grain, and $2.70 per cwt for brokens milled value. The corresponding loan deficiency payment (LDP) rates were also unchanged at $3.30 per cwt for long grain, $3.07 per cwt for medium grain and $3.11 per cwt for short grain.
The USDA reported net rice sales of 120,900 tons and exports of 63,100 tons during the period December 14-20, a marketing year high. The U.S. exported 1,089,100 tons of rice between August 1 and December 20 of marketing season 2001-02, a 14% increase from shipments of 952,100 tons registered during the 2000-01 marketing season.
Outstanding sales stood at approximately 594,500 tons as of December 20. The figure marks a 4% increase from 570,600 tons for the same period in the 2000-01 season. Weekly rice exports so far have averaged 51,000 tons against a projected average of 54,000 tons for the marketing season 2001-02.
A new president--the fifth in two weeks--officially took office in Argentina on Wednesday (January 2). The change in power to the new Argentine President, Eduardo Duhalde, follows the December 30 resignation of Adolofo Rodriguez Saa, who served as Argentina's interim president for only one week.
Argentine exporters and millers remain mostly out of the market as they await economic policy announcements. The President is expected to initiate a devaluation of the peso instead of introducing a new currency. Advisers close to the President say that he is considering reducing the value of the peso by as much as 40%. Analysts believe Argentina will stop payments on $132 billion in debt.
Rice production in Cuba reached 271,780 tons in 2001. The 2001 rice output total represents an increase of approximately 7% from production of 254,000 tons in 2000, but a decline of approximately 1% production of 275,000 tons in 1999. With consumption at about 700,000 tons per year, Cuba's import need for rice stands between 400,000 and 450,000 tons annually. Most of Cuba's rice imports are low-quality long grain rice from Vietnam and China.
Vietnamese rice exporters are now only looking to complete previously concluded contracts. Most exporters are operating at a loss, as the prices when they signed contracts were significantly lower than what it now costs to buy rice domestically. Traders are waiting for supply from the winter-spring crop to come into the market in late February before they extend any new offers to buyers. Early indications suggest favorable water supply and potential rainfall will support an average potential yield for the winter-spring crop.
The President of Vietnam is scheduled to visit with top officials in North Korea in May. The visit would mark the first trip by a Vietnamese leader to North Korea since Vietnam and South Korea normalized diplomatic ties in 1992. The leaders are expected to talk about bilateral economic cooperation and Vietnamese rice aid for North Korea.
Thai rice prices were steady to slightly higher this week. Shipments to Japan, Malaysia, Indonesia and Vietnam and purchases of small quantities by Indonesian importers are helping to support prices. New sales have been limited, but traders are anticipating new demand from Nigeria and Iraq as industry participants return to work from the holiday break. Thai rice exports through December 25 totaled 7.37 million tons.
Thai traders report that the government plan to purchase rice has failed to attract much interest from Thai farmers. So far the government has only purchased 1 million tons of paddy. At the onset of the program, the government indicated they would purchase up to 8.7 million tons of rice from the harvest. Most traders expect the government to extend the plan when it expires at the end of February.
Pakistani rice prices are steady to higher. Prices have been supported by steady demand from Afghanistan, and a smaller than expected crop in 2001-02 that reduced the amount of exportable surplus available to exporters by approximately 1 million tons compared to last year. Activity in the market has been limited and traders continue to look for new demand to emerge. Most global importers appear to be covered for January shipment.
A delegation from the Government Trading Corp (GTC) of Iran plans to begin meetings with exporters in Pakistan on January 7 in order to negotiate the purchase of IRRI-9 and basmati 385. A November visit to Pakistan by an Iranian delegation resulted in purchases of 45,000 tons of rice. Pak exporters that have supplied rice to Iran before will reportedly be favored.
Indian exporters have captured steady sales of rice. African buyers and the European trading houses that buy rice for Africa have been attracted by low Indian rice prices. Traders predict that India will have exported approximately 2.4 million tons of rice by the end of this marketing year (March 2002). Overall rice sales are minimal, however, compared to the enormous government rice stocks.
According to the latest monthly economic report from India, rice stocks as of October 1, stood at 21.45 million tons. The figure marks a 0.5% decline from the total of 21.57 million tons a month earlier (September 1).
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