Analysis: Factors driving world rice prices in the coming time

This is probably not a secret to most rice producers: The rice market differs from other commodity markets in that it is dominated primarily by India and China.

According to Milo Hamilton, co-founder and senior agricultural economist at Firstgrain Inc., which publishes a newspaper for farmers and rice buyers, the market's 1.4 billion people have "no impact" normal" for rice.

China is both the largest exporter and the largest importer of grain, so moves from this country could cause anomalies in the rice market, such as the use of rice for food. feed on livestock, which would probably never happen in the United States.

Hamilton believes China may have supplied up to 50 million tonnes of rice for livestock because of high corn and soybean prices in recent months.

Speaking about the prospects for rice at the Mid-South Farm and Gin Show farmers fair in Memphis, Tenn, Hamilton said: “This number may not seem like a lot right now, but remember, 50 million tons is a lot. more than all the rice produced in the Western Hemisphere – about 5% of world rice production.”

"China is consuming a lot of rice for animal feed and it's hard to see that showing in their inventories, because China's rice production continues to grow," he noted when suggesting Refer to the chart depicting the ending stocks of the major rice exporters. “But no one is really sure what is happening in China. That's why the U.S. Department of Agriculture (USDA) puts out the numbers with and without [the impact of] China."

Ukraine's influence

Although the markets are very different, Hamilton said he keeps an eye on rice and wheat prices in the news due to the Russia-Ukraine conflict. Wheat prices rose sharply in a few days as Ukraine is a major exporter.

On February 26, he said: "Because of what happened last week (Russia-Ukraine conflict), rice prices are at a new low relative to wheat. As someone said this week, for with rice, sometimes nothing happens for decades, and then decades of change happen in a week. We don't even know its full meaning."

“I am fluent and read Russian, and I know there is no relationship between Russia and rice, but it could be spread to other regions,” he added.

Hamilton says he has noticed in his 40 years of trading in the rice market that the rice/wheat ratio can be very low and then reverse on its own.

“There are various reasons why that happens, but we are currently at a very low rice/wheat price ratio (0.8), he noted. In the next six months, my hunch is that rice prices in the US won't be low. It will go up.”

Drought in South America

Unlike other commodities, rice prices have been falling for much of 2021. But Hamilton said drought conditions in Brazil and Paraguay that have helped boost soybean prices could also be a factor.

Midsouth rice farmers should keep an eye on three markets - the US, South America and Asia. “Three markets should be considered at the same time,” he said. Sometimes one market or another is not important, but the key market is Brazil. The country is the largest producer and consumer of rice in South America, and it is a net exporter of rice in the world market.

“When Brazil has a lot of rice, this country can affect our rice exports to the Gulf. Back in January, when everyone saw a bearish trend in the Brazilian market, I said it was necessary to keep an eye on the situation. And guess what happened? Rice prices have increased by 30% in the past three months. I don't think this bull run is over because Brazil has a drought that affects corn and soybean production. Rice is also affected," Hamilton said.

The Parana Basin (in southern Brazil near Paraguay) is dry. "Paraguay sells rice to Brazil, and if Paraguay lacks rice to sell to Brazil, Brazil will stop exporting a lot of rice. It's a very simple phenomenon, and I don't know when Brazil's rice exports will stop. ", the analyst.