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Volume 19, Issue 21

May 27, 2022

In This Issue:

  • Complicated Marketing Year Ahead for Farmers
  • Washington, D.C. Update

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Complicated Marketing Year Ahead for Farmers

Planting has rounded out and there remains less than 5% of acres to be put in the ground in Arkansas. It appears we will crest the 1 million acre mark, which is welcome news considering the earlier fears on account of weather. With planting all but over, there is now a tumultuous marketing year ahead, navigating high input prices, rising food costs, and deteriorating trade relationships as protectionism sets in to many U.S. long grain customers in Central and Latin America, making exports more difficult than ever.

 

We touched last week on Mexico’s plan to curb food inflation by removing import tariffs on a basket of goods, which includes paddy rice. It’s important to note that milled rice was not included in this, though there are more than 60 other basic food and household products that are lumped into this program to fight price inflation and food scarcity. Mexico is not the only country in the Western Hemisphere taking steps like this; Costa Rica proposed legislation to cheapen rice for consumers, Brazil has reduced their tariffs thru the end of 2023, and El Salvador announced a one-year suspension of duties on rice from all origins late in the first quarter of 2022. Adding all of this together equates to significant hurdles to export long grain rice to what has been traditional U.S. customers. This does not mean that all export business will dry up, but when Uruguay is currently selling at $550 pmt with no tariffs, and U.S. Long Grain is being quoted at $690 pmt, competing for business is obviously a challenge.

 

In Asia, the blossoming relationship between Thailand and Iraq is getting attention as of late. Iraq has made it no secret they were going to need well of 1 million metric ton of rice — there just weren’t a lot of people who expected most of it to come from Thailand. Iraq has historically spread their business out through issuing tenders, but with the new purchasing arm, negotiating directly with large trading outfits seems to be the new norm. The significant price disparity between the Eastern and Western Hemispheres made Asian origins the natural fit. Iraq hasn’t purchased significant quantities of rice from Thailand in nearly seven years, but that changed in August of 2021, and has rocketed forward ever since.

 

Reports indicate that Thailand will ship approximately 500,000 metric ton to Iraq by the end of this month, making Iraq the largest customer for Thai rice — something that is giving many traders whiplash. The Iraq business has disrupted the demand dynamics, forcing many West African buyers of Thai rice to look elsewhere, as milling availability is booked up, and prices are firm because of the Iraqi business. Viet prices have stayed flat, largely absorbing the fallout from Iraq occupying Thai exporters. India, Pakistan, and even Vietnam have a more difficult time meeting the Iraqi specifications, further bolstering Thailand as the strategic partner for this moment in time.

 

India has been in making headlines again because of their announced ban on wheat exports. Then rumors began swirling about a rice export ban — which flies against all logic from those familiar with the export volume in the last year. However, India is working to dispel the rumors of a rice export ban, as government officials are making it clear they have had successive record crops, and will continue their record export pace. 

 

The weekly USDA Export Sales report shows Net sales of 29,900 MT for 2021/2022, up noticeably from the previous week and up 74% from the prior 4-week average. Increases were primarily for Haiti at 15,200 MT. Exports of 25,900 MT were up 7% from the previous week, but down 46% from the prior 4-week average. The destinations were primarily to Japan (12,300 MT), El Salvador (5,300 MT), Guatemala (3,000 MT), and Canada (2,500 MT).


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Washington, D.C. Update

Biden Administration nominates Alexis Taylor to serve as the Undersecretary for Trade and Foreign Agricultural Affairs


This past week, the Biden Administration announced its intent to nominate Alexis Taylor to be Undersecretary for Trade and Foreign Agricultural Affairs. Taylor currently serves as the Director of the Oregon Department of Agriculture, where she oversees policy directives for Oregon’s 38 programs and its 500 employees. Prior to joining the Oregon Department of Agriculture, she served under the Obama Administration as USDA’s Deputy Undersecretary for Farm and Foreign Agricultural Service. She received her Bachelor of Arts in Political Science and minor in Communications from Iowa State University. Her nomination comes after growing concerns in the agricultural community were voiced about the Biden Administration's ability to fill key agricultural trade roles. 

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Cornerstone Trade Update

May 20, 2022
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Food and Ag Regulatory and Policy Roundup

May 23, 2022
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Mexico: Temporary Suspension of Import Tariffs on Basic Food Products

On May 16, 2022, Mexico (GOM) published a presidential decree temporarily exempting the payment of import duties on 66 tariff lines covering staple food items and basic commodities for food processing.

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Note: USRPA staff will be onsite for the 2022 Rice Market & Technology Convention all next week. USRPA will not publish the Rice Advocate next week. We will return with a new issue on Friday, June 12. 

June 28, 2022

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