China eyes five percent broken rice from Pakistan, Vietnam

January 22, 2013

RECORDER REPORT

Chinese demand looks likely to act as a partial safety valve for an amply supplied rice market for a second year running, as the world''s top consumer of the grain takes advantage of global prices around 25-30 percent below record domestic levels.

Still, Chinese demand looks unlikely to bail out Thailand - where a government rice buying scheme has built up stocks equal to half of global annual trade - as cheaper Vietnamese and Pakistani grain snatch the lion''s share of business. China''s rice imports jumped five-fold in 2012 to 2.6 million tonnes, making it the world''s second largest buyer after Nigeria. While it might import a bit less this year, the country will still tap bumper global supplies to ease record-high domestic prices and top up stockpiles. Global rice prices, which have fallen on Thai stocks and India''s booming exports, could find a floor on the back of this demand.

"Domestic prices are high so there is motivation for trading companies to increase imports," said an analyst with official think-tank China National Grain and Oils Information Centre (CNGOIC). "Bumper rice harvests in most Asian countries will keep global rice prices far below domestic prices."

The price of 5 percent broken rice in Vietnam has fallen 14 percent from its 2012 peak, with the market on track for a third consecutive month of decline. The 100 percent B grade Thai white rice is trading about 10 percent below last year''s high. At the same time, long-grain milled rice in China''s largest growing province of Hunan was quoted at a record 3,820 yuan per tonne in December, up 6 percent from the beginning of the year. China''s rice prices rose in 2012 for a third year in a row. The CNGOIC forecasts China''s rice imports in 2012/13 at 2 million tonnes, down from 2.85 million tonnes shipped a year earlier but enough keep the nation among top importers in the world.

Last year the market was dominated by Vietnam and Pakistan, and the two look likely to emerge on top again this year. China bought around 2 million tonnes of Vietnamese rice in 2012, a surge of more than six-fold from around 310,000 tonnes in 2011, according to Vietnam Customs data. The balance came from Pakistan. Vietnamese and Pakistani 5 percent broken rice in the Chinese market is quoted around $420-$425 a tonne, including cost and freight, compared with domestic price of similar variety being offered around $600 a tonne.  

Courtesy Business Recoder

A. M. Awan (Author)

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A M Awan Currently working as Marketing Executive at Oasis Agro Industries Pakistan, and hobbies to read about agriculture, share latest information with others