Commodities Bulletin #8 Rice Prices

Atlante is continuously monitoring the latest developments in the commodity markets to determine effective buying strategies. The rice market is currently experiencing sustained demand, and concerns are rising about the impact of El Niño on upcoming harvests, causing the FAO price index to rise.

•International rice quotations registered increases in April, up 2.5 percent on the FAO's All Rice Price Index compared to its value in March. These rises are largely driven by a recovery in demand, especially from Asia. However, concerns about the effects El Niño will have on the upcoming Asian harvest are likely to materialise.

Marked price increases characterised both the Indica variety due to substantial Indonesian and Malaysian imports, as well as white and basmati rice of Pakistani origin due to the sharp drop in production in Pakistan.

Price increases are not holding back European imports: +5.2% from September to the end of April.

Internationally, harvests are developing well in the main production areas and this will lead to a period of deflation, the intensity of which will also be defined by the effects of El Niño:

• CHINA: (main producer): rice sowing is starting under favourable conditions.

• INDIA: Rabi rice harvest is starting, estimated by the Indian government to be at record levels.

• VIETNAM: Rice yields currently being harvested are higher than last year, owing to favourable weather and increased fertiliser use (in deflation).

• THAILAND: The second-harvest rice harvest is proceeding with good yields owing to favourable weather and sufficient water supply.

• ITALY: April rice quotations on the Milan stock exchange remained generally stable. Paddy rice transfers remain sluggish and trade is very limited due to low demand from rice mills. For the coming campaign, areas are expected to decline by 3.4 %, although persistent drought conditions raise fears of lower sowings considering the high water requirements of rice. The contribution of the recent rains in the centre-north remains to be evaluated. However, despite the decrease in some areas, the arrival of the new crop is estimated to be higher than that of the current campaign.