1. Weekly News

Brazil

Brazil's Rice Production Forecasted to Increase for 2024/25 MY

The United States Department of Agriculture (USDA) has projected Brazil's paddy rice production for the 2024/25 marketing year (MY) at 10.882 million metric tons (mmt), an increase from the previous year's 10.441 mmt. Converted to milled rice, this is expected to reach 7.4 mmt, up from 7.1 mmt last year. The rice planted area is estimated at 1.60 million hectares (ha), up from 1.55 million ha. Milled rice exports are forecasted to remain steady at 1.1 mmt, while imports are expected to decrease to 1.1 mmt from 1.3 million tons. Milled rice stocks are projected to grow to 817 thousand metric tons (mt) from 717 thousand mt.

Global Demand and Weather Impacts Drive Up Brazilian Rice Prices

According to a Brazilian Food Industry Association (ABIA) survey, global demand and lower supply keep rice prices high. In Jun-24, Brazilian rice prices surged 39.8% year-on-year (YoY), reaching an average of USD 347.70/mt, though the month-on-month (MoM) increase was a modest 0.2%. This rise is due to significant agricultural losses caused by El Niño, leading producers to seek higher prices for paddy rice. Despite heavy rains in Southern Brazil, the country’s central rice-producing region, the 2023/24 harvest is expected to increase by 5.5% YoY to 10.6 mmt, balancing national supply and consumption. Similarly, adverse weather conditions have impacted global cocoa harvests, raising prices.

Vietnam

Vietnam's Rice Exports Surged in 2024 Amid Global Price Increases

In the first seven months of 2024, Vietnam exported 5.18 mmt of rice, generating USD 3.27 billion in revenue. This marks a 25.1% YoY increase in volume and a 5.8% increase in value. The average export price has risen to USD 632/mt, reflecting an 18% Yoy increase. The surge in global rice prices is partly due to India's ban on all rice exports except basmati white rice, which has increased export values for countries like Vietnam and Thailand. Vietnam remains a dominant supplier to the Philippines, holding an 85% share of its rice import market. For 2024, Vietnam's rice production is forecasted at 43 mmt, sufficient to meet domestic needs and contribute to export revenues exceeding USD 5 billion.

Vietnam’s Rice Production Declines Amid Crop Shifts and Environmental Challenges

Vietnam's rice sector faces significant challenges due to decreasing harvested areas and adverse weather conditions, according to the USDA's Foreign Agricultural Service (FAS). For the 2024/25 MY, the harvested area is reduced to 6.95 million ha from an earlier estimate of 7.15 million ha. Milled rice production is also adjusted downward to 26.5 mmt from 27 mmt, although Vietnam remains the sixth-largest rice producer globally. Despite these production constraints, rice exports are projected to increase to 7.9 mmt, bolstered by stable production and strong global demand. Domestic consumption is forecasted to decrease to 21.4 mmt from 22 mmt in the previous year, reflecting a shift in dietary preferences.

Iraq

Iraq Resumes US Rice Purchases Following Financial Restrictions Resolution

After months of uncertainty due to United States (US) government financial restrictions, Iraq has resumed purchasing rice from the US. ADM Rice has finalized a deal to ship US rice to Iraq this fall, a welcome development as the harvest season begins in the mid-South. The revival of this trade followed recent discussions between US Senators and Iraq’s Ambassador, which aimed to address the financial barriers that had previously hindered regular sales.

2. Weekly Pricing

Weekly Rice Pricing Important Exporters (USD/kg)

Yearly Change in Rice Pricing Important Exporters (W32 2023 to W32 2024)

India

In W32, wholesale rice prices in India decreased by 1.49% week-on-week (WoW) to USD 0.66 per kilogram (kg) from USD 0.67/kg. This price drop follows an increase in the area of paddy sowing to 16.61 million ha by July 19, 2024, compared to 5.56 million ha by the same date in 2023. The rise in the sowing area suggests a potential increase in rice production, estimated between 135.5 and 138 mmt for the Kharif crop year 2024/25, up from 111.46 mmt in the previous year. However, prices might rise if the monsoon fails and output is lower than expected.

Thailand

In W32, wholesale rice prices in Thailand remained stable WoW at USD 0.57/kg but saw a 1.79% increase MoM and a 3.64% rise YoY due to high demand. Thailand's rice exports during the first half of 2024 increased 50% YoY, totaling 5.08 mmt. This growth is fueled by strong demand from key markets such as Indonesia and the Philippines, expectations of higher production, and a weakened baht (THB). Thailand is now anticipating exporting 8.2 mmt of rice in 2024, up from the previous forecast of 7.5 mmt, with improved weather conditions reducing the impact of El Niño.

Vietnam

In W32, wholesale prices for Vietnamese regular rice remained steady WoW at USD 0.62/kg but increased by 7.42% MoM from USD 0.58/kg in W29. This price rise is due to strong demand and a forecasted increase in rice exports, driven by robust supply and rising demand towards the year's end. Critical markets for Vietnamese rice include the Philippines, Indonesia, China, Malaysia, Singapore, and Ghana. In the first seven months of 2024, Vietnam exported 5.18 mmt of rice, generating USD 3.27 billion in revenue, marking a 25.1% YoY increase in volume and a 5.8% increase in value. The Ministry of Agriculture and Rural Development projects that Vietnam will produce 43 mmt of rice in 2024, with 8 mmt designated for export, aiming for a total export value of USD 5 billion.

United States

The wholesale price of US-milled white long rice in Arkansas remained steady at USD 0.80/kg, marking a 2.44% YoY decrease. Despite challenges during the summer months, including Iraq's banking issues and the crisis in Haiti, the US milled rice market shows resilience due to favorable harvest conditions. Moreover, after months of uncertainty due to the American government’s financial restrictions, Iraq has resumed purchasing rice from the US. Efforts are focused on strengthening export markets and improving internal relations to maintain market stability.

3. Actionable Recommendations

Strengthen Export Partnerships and Diversify Markets for Rice Producers

For countries like Vietnam, Brazil, and the US, which are facing fluctuating rice production and prices, strengthening export partnerships and diversifying markets can help stabilize their rice industries. With its significant export potential, Vietnam should further enhance its presence in key markets such as the Philippines, Indonesia, and Ghana while exploring emerging markets to mitigate the impact of domestic production constraints. Facing high domestic prices, Brazil can benefit from solidifying trade agreements and expanding its market reach to balance its export volumes and stabilize local prices. The US should reinforce its trade relationships, particularly in regions like Iraq, and seek new opportunities in other international markets to ensure steady demand and support price stability. By diversifying their export strategies and expanding market access, these countries can better navigate global rice market fluctuations and secure stable revenue streams.

Optimize Domestic Supply Chain and Storage Solutions

Countries such as Vietnam, Brazil and India should optimize their domestic supply chains and storage solutions to address rice production and price volatility challenges. Improved infrastructure and logistics can help manage supply more effectively and reduce post-harvest losses. Investing in advanced storage facilities to preserve rice quality and extending support to farmers for better storage practices can prevent spoilage and stabilize prices. Additionally, enhancing domestic distribution networks to ensure timely and efficient delivery to local and international markets can help balance supply and demand. By strengthening these aspects of their rice industries, these countries can improve market stability and reduce the impact of production and weather-related challenges on rice prices.

Enhance Price Management Strategies Amidst Global Market Dynamics

Rice-producing countries like India, Vietnam, and Brazil should implement effective price management strategies to cope with global market dynamics and local production changes. For instance, India can use data-driven forecasting to adjust domestic rice pricing and market interventions based on sowing and production estimates. Vietnam should leverage its strong export demand to negotiate better prices and contracts, ensuring its price stability remains intact despite production constraints. Brazil can focus on pricing strategies that reflect domestic and international market conditions, ensuring that the higher prices do not deter export competitiveness. By adopting these strategies, rice-producing countries can better manage price volatility and ensure market stability in the face of global and domestic challenges.

Sources: Portal Do Agronegócio, UkrAgroConsult, Voh, Broadcast, USA Rice Daily, prabhatkhabar