Oryza Rice Recap Rice Prices Going Nowhere Quick

The worst U.S. drought since 1988 continues to spur soybean, corn, and wheat prices higher. Meanwhile, India’s monsoon rains are improving but remain high, potentially endangering the nation’s rice crop. None the less, the global rice balance sheet remains comfortable and price ideas subdued.

Most rice industry participants don’t expect rice prices to escalate like they did back in 2008, despite the current rally in grain prices, because Thai and Indian rice stocks remain high thanks to a multi-year rice export ban in India and the slower pace of Thai rice exports due to high prices from the nation’s rice mortgage scheme. Indian rice stocks stand at about 30 million tons – twice the buffer norm of about 14 million tons - while Thai rice stocks stand at about 10 million tons, basis milled, thanks to the Thai rice mortgage scheme. Global rice trade for 2012 is estimated at around 35 million tons, down slightly from last year, due to lower import demand, not export supplies.

Darren Cooper, a senior economist at the International Grains Council in London says about rice, "The dynamics are totally different -- rice is not going to go the way corn, soybeans and wheat have gone. It is the picture we see on the supply side which is really bearish for the market."

Ideas that India’s monsoon rains will reduce rice production, potentially pushing the government to restrict non-basmati rice exports could create an opportune time for Thailand to book some export sales. However, Thailand’s window of opportunity to see higher prices may be limited as Thailand’s new crop harvest gets underway in October. And, despite recent talk, a return of India’s non-basmati rice export ban still looks unlikely.

India’s Agriculture Minister has revealed that the government may review its rice export policy in the second week of August in case rainfall does not improve. The monsoon arrived about two weeks late in India this year and the deficit so far has been around 22%. However, most don’t think the Indian government will ban non-basmati rice exports this year, including the former head of the Rice Exporters’ Association of India. He said, "Indian supplies will continue even if the monsoon rains fail this year as the rice SA.