19th October ,2015 Daily Exclusive ORYZA Rice E-Newsletter by Riceplus Magazine

8/20/2019 19th October ,2015 Daily Exclusive ORYZA Rice E-Newsletter by Riceplus Magazine

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Daily Exclusive ORYZA Rice E-NewsletterContents are published with permission of ORYZA.com

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Vol 5.Issue X

October 19, 201

Daily Exclusive ORYZA Rice E-Newsletter


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Total area planting to India's 2015-16 Kharif (main) rice crop (June - December) is continuing tolag behind last year due to poor post-monsoon rains. Total rice planted area stood at around37.824 million hectares as of October 16, 2015, slightly down from around 37.967 millionhectares planted during the same time last year, according to a press release by the AgricultureMinistry.

India received 46% below-average rainfall as of October 15, according to the IndianMeteorological Department (IMD). The North-west, Central, North-East and southern regionsreceived 81%, 69%, 54% and 3% below-average rains respectively.

A likely drought-inducing El Nino this year is expected to lower production prospects in Indiathis year. Extending drought conditions are already dampening production prospects in Thailand,Indonesia and the Philippines. Rice prices in Asia are expected to surge due to expected lowersupplies.

The government of India forecasts 2015-16 kharif (June - December) rice production at around90.6 million tons, slightly down from around 90.86 million tons in 2014-15.


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The total Kharif crop sown area stands at 103.881 million hectares as on October 16, 2015, upabout 1.2% from around 102.585 million hectares during the same period last year, according tothe Agriculture Ministry.

Pakistan Banks Unwilling to Roll Over Rice

Sector Loans on Blanket Basis, Says SBP

Official

Oct 16, 2015

Commercial banks in Pakistan are reportedly unwilling to roll over or reschedule rice sectorloans on a blanket basis, local sources quoted the State Bank of Pakistan (SBP) spokesperson.

“Commercial banks are only accommodating those rice millers, exporters, and rice growers who

are having genuine difficulties in repaying their loans,” said the SBP official.

“The final decision to reschedule loans is to be taken by the individual banks based on the merit

of individual case. Some cases might have merit issues and banks might be reluctant toreschedule,” he added.

The Prime Minister announced a rollover of loans until June 2016 as part of the relief package

given to the sector last month. The commercial banks also agreed to the proposal in a meetingwith the SBP. However, no bank has so far implemented the loan roll overs. They have been infact pressurizing millers and farmers to pay loans on time.

Rice exporters, millers and growers are already struggling with declining prices and increasingstocks. The country reportedly has about 500,000 tons of unsold basmati stocks.

If loans are not rolled over, the rice sector stakeholders fear that their problems would becompounded and the outcome would be bad for the whole sector, which is a major contributor ofthe foreign exchange in the country.

Oryza Exclusive Interview - India and

Pakistan Should Jointly Chart Out a


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Strategy to Protect Basmati Prices, Says BGA

President

Oct 16, 2015

In an exclusive interview with Oryza, Mr. Choudhry Hamid Malhi, President of the BasmatiGrowers’ Association (BGA) of Pakistan shares his views about the dwindling basmati rice prices both in India and Pakistan. He also talks about the actions to be taken by the twogovernments. Excerpts from the interview….

Oryza: Export prices of Indian basmati are falling since the beginning of this year due to risingsupplies and falling demand. Can the government be successful in protecting prices with theimposition of MEP?

Mr.Hamid Malhi: MEP is the only way prices of Basmati rice can be stabilised at a level whichis not detrimental to the farmers in particular and the sector in general.

Oryza: Will the measure really help farmers who are currently not in a position to even recover production costs? How much MEP do you think would be optimum?

Mr.Hamid Malhi: The cost of production has risen manifold in the last decade and there is noother way out but to impose MEP to ensure that at least Basmati Rice is not exported atthrowaway prices below 1000USD. The best strategy would be to involve the CommerceMinistry of Pakistan in the decision so that the same is also enforced by Pakistan.

Oryza: Why do you think the Indian government is not taking appropriate measure to curtail price falls so far?

Mr.Hamid Malhi: Sheer indifference to farmer’s problems.

Oryza: There are doubts whether traders and millers would procure basmati paddy in the usualmanner due to lower export demand especially for the PUSA 1509 variety. They are alreadyunwilling to buy paddy at the government MSP. What could be ideal solution in this situation?

Mr.Hamid Malhi: The demand is not low but instead the buyer is enjoying the benefits ofcompetition amongst the two Basmati growing countries of the world. Had there been a wellthought out MEP joint strategy in place as I had suggested last year to Chairman APEDA, thingswould have been much better. Even now if the two governments join to fight this set back inBasmati prices I think there is no reason why prices would not recover.

Oryza: What if stocks increase with farmers and millers? What would be the impact of thisdevelopment on prices?


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Mr.Hamid Malhi: In a scenario where stocks pile up and prices continue to fall it would bedisastrous for the whole sector. This is the third year of this downfall and all players have lostsavings and some are even under debt.

Oryza: Export prices of Pakistan Basmati are also down by about 38% from their year ago

levels. Are the Pakistan basmati prices relatively better than those of India's?

Mr.Hamid Malhi: They are worse than India and the paddy prices are extremely low in theabsence of any government regulatory mechanism.

Oryza: What else do you think are similar between Pakistan and India basmati rice sectors?

Mr.Hamid Malhi: India has a much larger production and export of Basmati and thus has moreto lose in the shape of loss in export earnings.

USDA Estimates 2015 Global Rice Trade toDecline 2% y/y to 42.4 Million Tons

Oct 16, 2015


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In its October Rice Outlook report, USDA forecasts 2015 global rice trade at around 42.4 milliontons, down 2% from an estimated 43.2 million tons in 2014, and unchanged from last month'sforecast. USDA expects a 2 million ton or 18% decline y/y in 2015 Thai rice exports and weakershipments from Egypt, but says an increase from other countries such as India, Pakistan and theU.S. may not fully compensate for fall in Thai exports.

On the exports side, there were no major significant revisions, says USDA. On the imports side,USDA lowered prospects Iraq, Hong Kong, Japan, Russia, Ghana and Mauritius.

USDA estimates global rice trade in 2016 at around 42 million tons, slightly down from last month's

forecast of 42.2 million tons and estimated 42.44 million tons in 2015. It lowered 2016 export prospects

for India, Myanmar, Cambodia and the U.S., but increased forecasts for Thailand, Pakistan and Egypt. It

lowered 2016 import forecasts for Iraq, Mexico, Hong Kong, Ivory Coast, Ghana, Mauritius, South

Africa and Tanzania, but increased forecasts for the Philippines.

Japan Feed-Rice Production to Reach420,000 Tons in 2015

Oct 16, 2015

Japan's feed-rice output in 2015 is likely to reach around 420,000 tons, more than double ofaround 187,000 tons in 2014, Bloomberg quoted a report by the Agriculture Ministry.

The Ministry forecasted in May that the feed-rice output would reach around 350,000 tons.

USDA estimates Japan to produce about 10.772 million tons of paddy (around 7.84 million tons, basis milled) in MY 2014-15 (November - October) and import around 650,000 tons of rice in2015.

Oryza Afternoon Recap - Chicago Rough

Rice Futures Erase Yesterday's Gains as

Bears Regain Control, Prices Fall over $1/cwt

in Two Weeks

Oct 17, 2015


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Chicago rough rice futures for Nov delivery settled 17 cents per cwt (about $4 per ton) lower at$12.110 per cwt (about $267 per ton). The other grains finished mostly lower today, with onlycorn managing to close in the green; Soybeans closed about 0.8% lower at $8.9825 per bushel;wheat finished about 2% lower at $4.9225 per bushel, and corn finished the day about 0.3%higher at $3.7675 per bushel.

U.S. stocks traded in a range Friday amid data releases and continued expectations of a delay in aFed rate hike. The major averages held little changed in afternoon trade after briefly giving upmost of their opening gains. Stocks rallied Thursday, with the Dow up more than 200 points andthe Nasdaq jumping more than 1.5%.On the data front, industrial production declined 0.2% inSeptember, with capacity utilization at 77.5%.

The preliminary read on October consumer sentiment came in at 92.1. JOLTS showed 5.37million job openings for August. In Europe, the pan-European Stoxx 600 index ended 0.6%higher. In Asia, Japan's Nikkei finished 1.08% higher. In early afternoon trade, the Dow JonesIndustrial Average gained 22 points, or 0.13%, at 17,164. The S&P 500 rose 1 point, or 0.10%,

at 2,025, with consumer staples leading five sectors higher and energy the greatest decliner. The Nasdaq fell 2 points, or 0.06%, at 4,867. Gold is trading about 0.4% lower, crude oil is seentrading about 1.7% higher, and the U.S. dollar is seen trading about 0.1% higher about 1:00pmChicago time.

Thursday, there were 2,122 contracts traded, down from 4,529 contracts traded on Wednesday.Open interest – the number of contracts outstanding – on Thursday increased by 98 contracts to12,804.

Oryza Weekly: Global Rice Prices Continue

to Increase Amid El Nino ConcernsOct 17, 2015

The Oryza White Rice Index (WRI), a weighted average of global white rice export quotes,ended the week at about $392 per ton, up about $2 per ton from a week ago, up about $1 per tonfrom a month ago and down about $65 per ton from a year ago. El Nino seems to have provideda floor to the global rice market. Forward expectations are that the price recovery may be flat toslow for a while, no V-shaped price recovery. The USDA is projecting lower rice productionand trade in 2015-16. USDA forecasts 2015-16 global rice production (milled basis) at around474 million tons, down about 1% from last year due to an expected decline in acreage as well asdecline in average yields, which are likely to be affected by adverse weather conditions. Itforecasts 2015 global rice trade at around 42.4 million tons, down 2% from an estimated 43.2million tons in 2014, and unchanged from last month's forecast.

Global macroeconomics remains shaky amid uncertainty over when the U.S. Federal Reservewill raise interest rates, a move that will likely precede a stronger USD. Expectations for a rate


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hike continue to be pushed further out, possibly into 2016 at this point, as economic datadisappoints again and again.

Thailand

Thailand 5% broken rice is today shown at about $365 per ton, up about $5 per ton from a weekago, up about $25 per ton from a month ago and down about $60 per ton from a year ago.Adverse weather seems to be supporting prices, but it’s not clear yet how much this could

translate into lower sales.

Rice exports declined sharply in August after increasing about 7% m/m in July. In August,Thailand exported about 696,919 tons of rice, about 5% less than in July and about 29% less thanin August 2014.


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The military government plans to seize the assets of the former Prime Minister YingluckShinawatra to compensate the losses incurred by the state under the rice pledging schemeintroduced by her government in 2011.

The government of Thailand has canceled sales of around 345,472 tons of stockpiled rice made

in the auction conducted on September 29 because prices have increased since the auction.

The government continues to advise farmers to avoid off-season rice planting since water levelsin the reservoirs are not sufficient for rice farming.

Vietnam

Vietnam 5% broken rice is today shown at about $360 per ton, up about $10 per ton from a weekago, up about $30 per ton from a month ago and down about $75 per ton from a year ago. Vietand Indian rice quotes are just behind Thai quotes recovering in recent weeks on export sales andEl Nino concerns.

The Vietnam Food Association this week reiterated plans to develop a national brand forVietnam’s rice based on the jasmine type.

In Cambodia, 5% broken rice is today shown at about $420 per ton, up about $5 per ton from aweek ago, down about $5 per ton from a month ago, and down about $50 per ton from a yearago.

India

India 5% broken rice is today shown at about $355 per ton, up about $5 per ton from a week ago,

down about $25 per ton from a month ago, and down about $65 per ton from a year ago. Indianrice quotes for 5% are $10 per ton behind Thailand but $45 per ton above Pakistan.

El Nino has had little effect on India’s rice acreage. Total rice planted area stood at around

37.824 million hectares as of October 16, 2015, slightly down from around 37.967 millionhectares planted during the same time last year.

The USDA Post estimates India’s rice exports in MY 2015-16 (October-September) to decline toaround 9 million tons, about 30% lower than MY 2014-15 due to anticipated lower productionand tighter domestic supplies.

Pakistan

Pakistan 5% broken rice is today shown at about $310 per ton, unchanged from a week ago,down about $5 per ton from a month ago and down about $90 per ton from a year ago.


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Commercial banks in Pakistan are reportedly unwilling to roll over or reschedule rice sectorloans on a blanket basis. They are ready to accommodate those millers, exporters and farmerswho have genuine difficulties in repaying their loans.

The USDA Post estimates Pakistan’s MY 2014-15 (November-October) rice exports will remain

unchanged from last year’s level of around 4 million tons.

Central & South America

Brazil 5% broken rice is today shown at about $500 per ton, unchanged from a week and amonth ago and down about $100 per ton from a year ago. The Brazilian paddy rice indexmaintained by CEPEA reached around 40.32 real per 50 kilograms as of October 12, 2015,slightly up from around 39.94 real per 50 kilograms recorded on October 5, 2015. In terms ofUSD per ton, the index reached around $207.33 per ton on October 12, 2015, slightly down fromaround $207.45 per ton recorded on October 5, 2015. Month-on-month, the index has increasedabout 9% from about 37 real per 50 kilograms on September 13, 2015. In terms of USD, the

index increased about 7% during the month.

Experts say that the rice industry in Paraguay needs to find new markets for its rice exports inorder to deal with declining productivity and prices; traditionally, the country exports 85% of itsrice crop to Brazil.

Five percent broken rice from Uruguay and Argentina is today shown at about $535 per ton,down about $5 per ton from a week ago and a month ago, and down about $65 per ton from ayear ago.

U.S.

U.S. 4% broken rice is today shown at about $500 per ton, unchanged from a week ago, downabout $35 per ton from a month ago and down about $20 per ton from a year ago.

Chicago rough rice futures for November delivery faced a steady decline this week, hitting theweekly high on Monday at $13.065 per cwt (about $288 per ton) before dropping to a weeklylow of $11.990 per cwt (about $264 per ton) on Thursday. Futures then regained some to finishthe week at $12.140 per cwt (about $268 per ton).

Rice growers in California estimate the 2015 output to decline to around 1.55 million tons, adecrease of about 8% from 1.68 million tons in 2014.

The USDA’s Organic Agriculture Research and Extension Initiative has allocated a grant of

$555,000 to Washington-based The Organic Center to enhance organic rice research and boostorganic rice production in the southern regions of the U.S.


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The Trans-Pacific Partnership (TPP) deal finalized last week has reportedly ensured thattariffs on rice imports will eventually be eliminated by the member countries in the next tenyears, according to a statement by the USDA.

Japan, Malaysia, Vietnam and the U.S. have agreed to alter or gradually remove tariffs on rice

imports.

Japan, which has been adamant on increasing duty-free rice imports from the U.S. has agreed toinitially allow 50,000 tons of duty-free rice imports from the U.S. and gradually increase up to70,000 tons by thirteenth year. Japan will reportedly increase imports from the U.S. by 2,000tons from the fourth year of the agreement. Japan will also modify its quota administration toenhance the transparency and effectiveness of the new country specific quota (CSQ). It has alsoagreed to immediately eliminate its 36 yen per kilogram (12.7% ad valorem equivalent) tariff onother animal feeds, containing rice. Malaysia will eliminate tariffs on rice, currently rangingfrom 15-40%, in ten years and lock in tariffs on rice products at zero percent. Vietnam willeliminate its tariffs on rice, which are currently at 40% with immediate effect. It will also

eliminate its tariffs on rice products, currently as high as 35%, in eight years or before. The U.S. will eliminate tariffs on rice products, currently as high as 11.2%, in zero to 15 years.

Other Markets

The Philippines may import an additional one million tons of rice next year in order to maintainadequate stocks and avoid price hikes, especially with a strengthening El Nino on the horizon.

Rice stocks in the Philippines declined in September for the fourth consecutive month. Total ricestocks as of September 1 stood at around 1.96 million tons, down about 12.5% from August andabout 31.5% higher than the same period last year.

The Philippines Statistics Agency estimates the Philippines paddy rice production in the thirdquarter (July-September) of 2015 to decline about 14.8% y/y to 2.579 million tons, down fromits previous forecast of 2.589 million tons.

Rice production in South Korea is estimated to increase about 0.4% y/y to 4.258 million tonsdue to higher yields. Experts are concerned that increasing supplies and falling consumption inthe country may lead to a decline in prices domestically.

The governments of Nigeria and Brazil have decided to work together to enhance agriculturalresearch in Nigeria and boost food production and security in the country.

The Federal Government of Nigeria plans to ban rice imports starting in 2017.

Indonesia, which has signed purchase contracts with Vietnam and Thailand to import rice incase of a need, will decide about the imports in November or December.


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Japan's feed-rice output in 2015 is likely to reach around 420,000 tons, more than double ofaround 187,000 tons in 2014

Paddy rice prices in Italy increased sharply in the second week of October; however, prices arelower than in past years.

Thailand, India Rice Sellers Alter Some of

Their Quotes Today; Other Asian Quotes

Remain Unchanged

Oct 16, 2015

Thailand rice sellers lowered their quotes for fragrant A1 Super rice variety by about $5 per tonto around $350 - $360 per ton. India rice sellers lowered their quotes for 5% and 100% ricevarieties by about $5 per ton and $10 per ton respectively to $350 - $360 per ton and $290 -$300 per ton. They increased their quotes for 25% broken rice variety by about $10 per tonaround $325 - $335 per ton. Other Asian rice sellers kept their quotes unchanged.

5% Broken Rice

Thailand 5% rice is indicated at around $360 - $370 per ton about $5 per ton premium onVietnam 5% rice shown at around $355 - $365 per ton. India 5% rice is indicated at around $350- $360 per ton, about $45 per ton premium on Pakistan 5% rice shown at around $305 - $315 per

ton.

25% Broken Rice

Thailand 25% rice is indicated at around $330 - $340 per ton, about 5% discount on Vietnam25% rice shown at around $335- $345 per ton. India 25% rice is indicated at around $325 - $335 per ton, about $45 per ton premium on Pakistan 25% rice shown at around $280 - $290 per ton.

Parboiled Rice

Thailand parboiled rice is indicated at around $365 - $375 per ton. India parboiled rice is

indicated at around $335- $345 per ton, about $70 per ton discount to Pakistan parboiled rice lastshown at around $405 - $415 per ton.

100% Broken Rice

Thailand broken rice, A1 Super is indicated at around $305 - $315 per ton, at par with Vietnam100% broken rice shown at around $305 - $315 per ton. India's 100% broken rice is shown at


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around $290 - $300 per ton, about $15 per ton premium on Pakistan broken sortexed rice shownat around $275 - $285 per ton.

USDA Forecasts 2015-16 Global RiceProduction to Decline on Lower Acreage and

Yields

Oct 16, 2015


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In its October 2015 Rice Outlook report, USDA forecasts 2015-16 global rice production (milled basis) at around 474 million tons, down about 1% from last year due to an expecteddecline in acreage as well as decline in average yields, which are likely to be affected by adverseweather conditions. USDA's projection is down from last month's projection of around 475.8million tons. Southeast Asia, North Africa, and North America account for most of the expected

global rice production decline in 2015-16.

USDA lowered 2015-16 production prospects for Thailand, India and the U.S. However, it raised production forecasts for Tanzania, Madagascar and Kenya.

USDA forecasts 2015-16 global rice acreage at 159.2 million hectares, down from an estimated160.2 million hectares in 2014-15. Thailand is accounting for more than half of the decline, saysUSDA. While acreage in Bangladesh and India is expected to increase, that in Myanmar,Cambodia, Nigeria and the U.S is expected to decline. USDA forecasts the average global yieldat 4.44 tons per hectare (on rough rice basis), slightly down from 4.46 tons per hectare in 2014-15.

USDA estimates 2015-16 global rice consumption and residual use at around 487.5 milliontons, up about 1% from last year, and slightly up from last month's forecast of around 487.4million tons. China is accounting for more than half the projected increase in global riceconsumption in 2015-16, according to the USDA. It forecasts consumption to increasein Bangladesh, Brazil, Indonesia, the Philippines,

Thailand, and Vietnam. On the other hand, it forecasts consumption to decline in South Koreaand the U.S.

The U.S. agency estimates 2015-16 global rice ending stocks to decline by about 13% y/y to around 88.3

million tons, and down from last month's forecast of around 90.2 million tons. China, India, Pakistan,Thailand, the United States, and Vietnam account for the bulk of the projected decline in global ending

stocks in 2015-16. USDA estimates 2014-15 global stocks-to-use ratio at 18.1%, down from last year's

21%.

Global Rice Quotes

October 19th, 2015

Long grain white rice - high quality

Thailand 100% B grade 365-375 ↓

Vietnam 5% broken 365-375 ↑

India 5% broken 350-360 ↔

Pakistan 5% broken 305-315 ↔


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Myanmar 5% broken 415-425 ↔

Cambodia 5% broken 415-425 ↔

U.S. 4% broken 490-510 ↔

Uruguay 5% broken 535-545 ↔

Argentina 5% broken 530-540 ↔

Long grain white rice - low quality

Thailand 25% broken 330-340 ↔

Vietnam 25% broken 345-355 ↑

Pakistan 25% broken 280-290 ↔

Cambodia 25% broken 400-410 ↔

India 25% broken 330-340 ↑

U.S. 15% broken 500-510 ↔

Long grain parboiled rice

Thailand parboiled 100% stxd 365-375 ↔

Pakistan parboiled 5% broken stxd 405-415 ↔India parboiled 5% broken stxd 340-350 ↑U.S. parboiled 4% broken 590-610 ↔

Brazil parboiled 5% broken 545-555 ↔Uruguay parboiled 5% broken NQ ↔Long grain fragrant riceThailand Hommali 92% 820-830 ↔Vietnam Jasmine 475-485 ↑India basmati 2% broken NQ ↔Pakistan basmati 2% broken NQ ↔Cambodia Phka Mails 830-840 ↔BrokensThailand A1 Super 305-315 ↔Vietnam 100% broken 305-315 ↔Pakistan 100% broken stxd 275-285 ↔

Cambodia A1 Super 355-365 ↔India 100% broken stxd 290-300 ↔Egypt medium grain brokens NQ ↔U.S. pet food 330-340 ↔Brazil half grain NQ ↔

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

19th October ,2015 Daily Exclusive ORYZA Rice E-Newsletter by Riceplus Magazine

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