In W25 in the rice landscape, Tridge’s analysis indicates that there are growing concerns about the upcoming El Niño weather patterns predicted for July-2023. There is an apprehension that these patterns may worsen drought conditions across Asia and result in a decrease in agricultural production, particularly affecting rice production. As a result, Indonesia and Bangladesh are taking measures to expand their rice stockpiles, while India, Thailand, and Vietnam anticipate high demand for rice exports. Indonesia, facing a predicted drop in rice production by 3% YoY, plans to increase rice import quotas from 2 million mt to 3 million mt in 2023, sourcing an additional 1 million mt from India. Bangladesh has also increased its rice imports from India by 30% YoY to secure domestic supplies. Meanwhile, India, Thailand, and Vietnam are expected to boost rice exports to meet growing demand. Thailand's rice exports have already registered a 20% YoY increase, reaching 3.3 million mt in the first five months of 2023, with a projected total of 8.5 million mt for the year. Vietnamese rice exports have also surged by 40% YoY in the same period, mainly supplying the Philippines and China. However, the severe El Niño raises concerns about global rice production and could lead to a decline in global rice stockpiles, putting upward pressure on prices and increasing market volatility. The USDA forecasts a 5% YoY decrease in global rice stockpiles to 173.5 million mt in 2023. Monitoring the impact of El Niño on rice production and supplies will be crucial in the coming months.
Vietnam's export rice prices reached a more than two-year high due to tight supplies, with the average price of 5% broken rice offered at USD 498/mt, the highest since Apr-2021, and higher than USD 490-495/mt in W24. Concerns about the potential impact of the El Niño weather phenomenon on output have affected rice production prospects. The early signs of hot and dry weather caused by El Niño are threatening food producers in Asia, leading to fears of drought. In India, supply shortages and government procurement price hikes pushed the price of 5% broken parboiled rice to a more than three-month high of USD 390-398/mt. Bangladesh continues to face high domestic rice prices, prompting plans to increase sales of subsidized rice from July-2023 to support the poor amidst high inflation.
In the first five months of 2023, Thailand's rice export turnover reached 3.47 million mt, a significant increase of 26.6% compared to the same period in 2022. This surge in rice exports can be attributed to the growing global demand as countries stockpile rice to prepare for the impact of the El Niño phenomenon. In May-2023, Thai rice exports increased by 88% YoY, reaching approximately 850 thousand mt. Thai rice shipments are mainly destined for Iraq, South Africa, China, the US, the Philippines, Indonesia, Japan, and Australia. The depreciation of the Thai Baht by 1.8% against the US Dollar in 2023 has further boosted Thailand's rice exports' competitiveness in the global market. Additionally, the potential limitation of export output by Vietnam has contributed to the increase in Thailand's rice export turnover. Thailand, the second-largest rice exporter globally after India, aims to surpass its target of 8 million mt of rice exports in 2023, following its export of 7.69 million mt in 2022, a 22.1% YoY increase. Thailand is facing a potential loss of up to 9 million mt of rice in 2023 due to prolonged heavy rains, which could result in the largest rice shortage in the past 20 years. This crisis has significant implications for the Asia-Pacific region, the main consumer of rice. As a result, the price of rice has surged to USD 17.5 per hundredweight, reaching a level twice as high as in July-2020. The situation highlights the challenges in rice production and its impact on global markets, particularly in the Asia-Pacific region. It’s worth noting that Thailand's rice prices remained unchanged in W25, but close to USD 500/mt, with new supply yet to enter the market and unpredictable weather causing price increases.
Lastly, SAFRAS and Mercado expect rice exports (husk base) from Brazilian ports in June-2023 to amount to 139.74 thousand mt, up 11% MoM and 6.4% YoY. So far in June-2023, Brazilian rice shipments have reached 99.98 thousand mt, 76.1% of the 131.3 thousand mt shipped throughout June-2022. For June-2023, there are still approximately 28.2 thousand mt scheduled for shipment, while around 111.6 thousand mt have already been shipped. The line-up for March to June projects the shipment of 462.55 thousand mt, a decrease from the 631.29 thousand mt in the same period in 2022. However, the Foreign Trade Secretariat indicates that from March to June, shipments amounted to 481,787 thousand mt, an increase from 418.31 thousand tons in the corresponding period in 2022. Senegal, Mexico, and El Salvador remain the main destinations for Brazilian rice shipments. The consistent pace of exports continues to support domestic prices, which are showing signs of a reversal after a prolonged decline.