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China’s feeding of rice could impact markets

TAGS: Marketing
China's imports of rice are exceeding export for first time and may impact markets.

The People’s Republic of China is the world largest producer and consumer of rice and has been exporting rice to neighboring countries until recently, according to Milo Hamilton, co-founder and senior agricultural economist for Firstgrain, Inc.

That is changing because of the need for more feed for the country’s growing livestock sector, and the strengthening of the yuan, China’s currency, Hamilton told viewers of the Rice Marketing Educational Seminar at this year’s virtual Mid-South Farm and Gin Show.

“In this chart, we have plotted imports, net trade and milled exports from China, and what you can see here is that we have turned down in the pace of the exports; we have turned up in the pace of imports; and now imports exceed exports for the first time in quite a while,” said Hamilton.

“As we go down the line, we may see an acceleration of this,” he noted. “If they continue to chew up large amounts of rice for feed, it won't take too long for them to get their stocks down, whatever they actually are.”

Much of the feed increase is for poultry. Poultry producers are mixing a ration of 85% rice and 15% wheat for chicken feed because more of China’s corn and soy meal supplies are going to hog production.

“That's probably a 10-million-metric-ton increase in demand for rice,” he said, adding that the strengthening of China’s yuan is making imported grains cheaper while increasing the price of its exports.

Hamilton displayed a chart that showed the growth of different countries’ economies from the time of Christ until 1950. The western powers – Europe, the Soviet Union, the United States and Canada – have been garnering more of the world’s wealth and GDP in the last two centuries.

“After 1950, Asia has come on strong, particularly China, and is reversing that trend,” he said, “And they're starting to go back to where they were at the time of Christ, which I think is interesting.”

The three biggest Asian countries – Japan, India and China – are very oriented towards rice. “So the popularity and perception of rice in the news will only grow,” he said. “There's a company out of Japan that has produced a rice flour that's in every way as good as wheat, but it has no gluten. And it cooks up quicker for industrial food service purposes.”

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