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rice-harvest-dfp-staff.jpg Delta Farm Press Staff

Rice market volatility: ‘get used to it’

Over the last 12 months the international rice market has been beset with disruptions that had little to do with supply and demand.

Over the last 12 months the international rice market has been beset with disruptions that had little to do with supply and demand.

“Get used to it,” said Milo Hamilton, president and co-founder of Firstgrain, Inc., a market advisory service in Austin, Texas.

Hamilton discussed those disruptions and other market issues in a quarterly rice outlook webinar Sept. 30. (

Rakesh Sodhia, Fortuna International, moderated the webinar and offered insights on international trade.

“Change will continue,” Hamilton said, “as 2020 events other than supply and demand continue to affect trade.”

He said bearish factors affecting rice markets include:

• Lower prices for U.S. rough rice.

• Asia production increases.

• Trade disputes with China.

• China reduction in rice trade.

Supportive factors include:

• The U.S. dollar is declining, which strengthen U.S. Gulf export bids.

• South American supply issues (supplies are wiped out).

• Paddy rice price differences between U.S. and Brazil ($265 per metric ton, U.S. vs recent high of $450 per metric ton in Brazil).

All this plays out against a backdrop of disruptions that were not even in the picture 12 months ago. “We had no global pandemic,” Hamilton said. “Unemployment was low, inflation was low, and the dollar was strong. Deadly fires were not burning out West and fewer storms were threatening the Gulf of Mexico. Also, no flooding was occurring in China, Bangladesh or Nigeria.”

He said the U.S. was not seeing riots a year ago.

“Volatility in rice stocks and price was low.”

Current disruptions

Current rice market disruptions include high retail prices in Brazil and possible elimination of import tariffs on rice, and perhaps soon, corn, and beans.

He said China bought 30% more grain from Brazil this year than in 2019 before the supply ran out. “I’ve never seen that before.”

Nigeria is suffering a production collapse. COVID-19 continues to affect production and transportation for India’s rice.

“We’re seeing a lot of changes just since our last update June 17,” Hamilton said.

He added that American and Asian rice prices “were getting jittery. Prices are back down again. They were up in the U.S. and are back down again. Asia is still up. Brazil and Nigeria rice prices are still higher. Markets have been down and up and up and down. Get used to it.”


He said a four-week drought in Nigeria in July adds to market volatility. “The drought resulted in weedy fields in August and producers had no money for labor or fertilizer, so yields will be off.”

Drought was followed by “record flooding in September, and threats of more floods remain from countries upriver,” Hamilton said.

Those factors combined result in more than a 2-million-metric-ton paddy rice loss and a spike in prices for Nigeria, currently at $450 per MT for paddy. Hamilton wonders if Nigeria will increase imports. Reports indicate the Nigerian president is not inclined to release hard currency for imports. “I hope they can import at least an additional 1 million tons,” Hamilton said.

Sodhia anticipates rice will move into Nigeria at some point. He said activity in Benin shows rice being loaded and headed for West Africa. Togo is also in the market for parboiled.

“If it’s in Benin, and rice prices are high, some will make it across the border into Nigeria,” Hamilton said.


Bangladesh has suffered production declines, also, and “has been toying with importing rice for the last few months,” Sodhia said. “Approval is there, but the mechanics have not been approved by the various ministries.”

He said the current stalemate is “a play between the farmer, the stockists and the government. My feeling is that the Bangladesh government is likely to import between 200,000 to 400,000 metric tons of rice in the next three to four months. This is definitely a market to watch.”

Labor issues

Asia has seen some labor disruption because of Covid-19, Hamilton said. Much of the labor force is temporary day labor, and many fear contracting the virus, creating worker shortages.

Transportation has been affected in India but is improving, Sodhia said. Traditionally, rice moves mostly by train, not trucks. “COVID-19 affected local transportation for two or three months but is now getting back to normal.”

Production increases

Over the last 30 years, rice production has increased substantially, Hamilton said. That increase did not depend on higher acreage but from increased inputs. Most of the growth has occurred in Asia. Hamilton said China production “is a mystery. China rice production uses 4.5 times more fertilizer than India and the U.S. input costs must be very high to maintain China’s self-sufficiency goal. China wants to be self-sufficient in everything — pork, eggs, milk and everything else — and not depend on global trade” Hamilton said.

That goal will be hard to meet.

“China is 5,000 miles away from its energy source in the Middle East, and 16,000 miles from South American grain markets.”

Hamilton also wonders about China’s potential to police sea lanes if the U.S. Navy is not involved.

China has had other production issues, including seven floods. “They have been pounded by rains. The official word is that the China rice crop is higher.” Hamilton said he’s skeptical, given the abnormal rainfall, double normal. “That much rain can cause production problems.”

Brazil, on the other hand, faces the opposite problem, drought.


Market volatility will persist. “Rice price is always on a razor’s edge,” Hamilton said. It’s a relatively small market with no significant international futures option.

Hamilton said Sub-Saharan Africa is a market to watch. “Production had been trending up until this year.”

The U.S. market depends on Asian rice for 25% of domestic demand, mostly aromatic rice. U.S. rice acreage, he added, often depends on soybean and rice prices in January.

He said rice prices are currently up in several markets—"Thailand, and Vietnam markets were high but are coming down. India went below the five-year average. Pakistan was also off. Brazil and Uruguay have been high and are staying that way. Brazil price was up recently to a record high level. India has seen a $40 increase in price."

Brazil’s high prices and supply shortfall could mean potential for U.S. rice. “The U.S. could send 200,000 to 250,000 metric tons of rice to Brazil, but it has to be there by Dec. 15.”

He said Brazil domestic consumption is up and expressed concern over a “price panic on rice and possibly corn and beans. Brazil could see negative trade in November.”

Asia will supply American demand, Sodhia said. “American rice buyers have to go to Asia. We’ve seen enquiries out of Venezuela and Brazil, for instance. We’re not sure when will it happen. But enquiries have started, so interest is genuine.”

If Nigeria opens imports, they might look to South America, when supplies are available again. “I don’t think they will buy from the U.S.,” Hamilton said. “Too many barriers exist. Most will come from India.”

Hamilton said, in an understatement, that 2020 has been interesting. “It’s been a hell of a market this year. Prices went way up in June and then collapsed. We might yet see a bounce in futures.”

No normal

Hamilton and Sodhia agree that markets are not heading back to normal.

Sodhia cited a recent FAO report that shows a decreasing demand. “Over the next 10 years supply growth will outpace demand growth, causing real prices for most commodities to remain at current or below current levels. Decreased output will ease pressure on land and resource use.”

He said expanding global population growth drives demand growth. “Consumption patterns vary with a country’s level of development. Over the next 10 years, we will see more supply and less demand for commodities, including rice.”

Hamilton said that prospect is better than over-demand and under-supply and resulting hunger. “This should be good news for school lunch programs,” he added.

Volatile markets will be around for quite some time, Hamilton said.

“As long as we have free trade, politicians, and weather variability, we will have variations in prices. Don’t assume that we are going back to normalcy and no volatility.”

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