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Rice prices remain high on constrained supplies and robust demand

12 June 20202 min reading

Since the beginning of 2020, export quotes have risen sharply by 15 to 30 percent for most exporters, initially elevating when export restrictions were implemented. Despite the reversal of most of these policies, prices have remained high throughout May and June for most exporters due to market concerns about tight supplies and strong demand, USDA says in its monthly report released on 12th June.

Remarkably, Indian quotes have been largely unmoved over the past few months as burdensome supplies weigh on its market. However, India’s continued lock-down amid the pandemic is constraining exports even at those prices and supporting the higher quotes of other exporters. On the demand side, global consumption is rising in 2019/20. Import demand has remained strong, especially with the Philippines, the largest importer, actively tendering for sizeable quantities.

In addition, tight supplies are supporting the higher prices. Overall, global production has fallen in 2019/20, notably in Southeast Asia and the United States. A drought in Thailand has buoyed prices with exports now forecast to slide to the lowest volume in 7 years. Similarly, in the United States, a smaller 2019/20 crop is expected to result in the very low stocks. Exceptionally high futures prices for nearby delivery and record U.S. imports in April are further evidence of the tight situation.

In the medium-term, more abundant global supplies are expected to alleviate some pressure. The South American 2019/20 harvest is nearly over, thus improving the Western Hemisphere supply situation. The 2020/21 global production is forecast at a record. U.S. production is forecast to recover with harvest beginning next month. Thai production is also expected to rebound in 2020/21, with harvest to begin in late 2020. The largest exporter, India, is also projected to have another bumper crop; however, its ability to move sizable quantities of rice into the global market will have a direct impact on the relative price levels. USDA

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