May 18, 2015

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Volume 5, Issue I
Daily Exclusive

ORYZA Rice
Newsletter

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Global Rice Market Dominated by

Government Intervention, Finds USITC
Report

May 15, 2015

The U.S. International Trade Commission (USITC), and independent, non-partisan, fact-finding
federal agency, which had launched an investigation to study global competitiveness of the U.S.
rice industry in June last year has found that the global rice market is characterized by relatively
low trading volumes and heavy government intervention in both export and import sectors,
according to a news releas
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e on its website.
In the report, Rice: Global Competitiveness of the U.S. Industry, which has been prepared on the
request of the House Committee on Ways and Means, the USITC noted that governments often
intervene in the rice markets to control prices and make them affordable for low-income groups.
It also aims to increase local rice production to achieve national self-sufficiency.The report
classifies the major rice producing countries as follows: 1) major consumers and surplus
producers such as India and Thailand, 2) major consumers and importers such as Indonesia and
the Philippines, or 3) major exporters but not major consumers, such as the U.S. and Uruguay. It
also finds that recently Myanmar, Cambodia, India, Pakistan, Uruguay, and Vietnam are turning
out to be low-cost producers of long-grain white rice giving a tough competition to the U.S. and
Uruguay, the traditional exporters of this type of rice.
It specifically provides an overview of the rice industry in the U.S. and other major global
producing and exporting countries and information on recent trade trends and developments in
the global market for rice. It compares the competitive strengths and weaknesses of rice
production and exports in the U.S. vis--vis other major exporting countries. It also provides a
quantitative assessment of the impact of government policies and programs in major producing
and exporting countries and their impact on the U.S. rice exports and imports.It states that import
tariffs on rice in major consuming countries hugely impacted the U.S. production and exports in
2013. It also states that in recent years, the U.S lost its market share in key export markets, such
as Mexico, Central America, the European Union, Haiti, and Ghana.

Relatively Weak Demand and Supply

Conditions May Impact Global Rice Trade in
2016, Says USDA
May 15, 2015

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In its May Rice Outlook report, USDA has forecasted 2016 global rice trade at around 42.3 million tons,
down about 2% from an estimated 43.15 million tons in 2015. USDA says the decline in global trade in
2016 can be attributed to weaker shipments from India as well as weaker purchases by Southeast Asia
and Sub-Saharan Africa.

On the exports side, USDA expects Thailand to remain the number one rice exporter in 2016
with 11 million tons followed by India with 8.5 million tons. It expects Vietnam with 6.7 million
tons and Pakistan with 3.8 million tons to be third and fourth largest exporters. USDA expects
increased exports from Cambodia (1.2 million tons) and Myanmar (2 million tons), Uruguay (1
million tons), Argentina (580,000 tons), Paraguay (500,000 tons) and Egypt (400,000 tons). It
however expects exports of Guyana (470,000 tons) and Australia (350,000 tons) to decline.
On the imports side, USDA expects Sub-Saharan Africa (12.3 million tons) to be the top
importing region followed by Middle East (6.7 million tons) and East Asia (6.4 million tons). It
exects South Asia to import 1.6 million tons, South and North America each to import 1.9
million tons, the EU to import 1.6 million tons and the Caribbean to import one million tons of
rice in 2016.
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For 2015, USDA raised its export estimates for India and Myanmar but lowered estimates for
Cambodia. It increased import estimates for Nigeria but lowered estimates for Ivory Coast.

Philippines 2015 Q1 Paddy Production

Surpasses 2014 Q1 Output by 1.41%, Says
PSA
May 15, 2015

The Philippines 2015 first quarter (January - March) paddy output has reached around 4.37
million tons, up about 1.41% from around 4.31 million tons during the same period in 2014,
according to a report released by the Philippine Statistics Authority (PSA).The PSA report shows
that the harvest area in the first quarter of 2015 had declined to around 1.15 million hectares,
down about 1% from last year's 1.16 million hectares. However, the yield per hectare increased
to around 3.8 tons per hectare, up about 2.27% from around 3.72 tons per hectare last year, says
the PSA.

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Production increases were witnessed in MIMAROPA, Cagayan Valley, Central Luzon and
Ilocos Region due to adequate supply of irrigated water and increased use of hybrid seeds,
according to the PSA.
The PSA expects paddy production in the first half of 2015 (January - June) at around 8.27
million tons, down about 1.32% from around 8.38 million tons last year. It expects harvest area
during the six-month period to decline to around 2.07 million hectares, own about 1.49% from
around 2.1 million hectares last year. It however says the yield during the January-June 2015
period may increase by about 0.17% to around 4 tons per hectare from around 3.99 tons per
hectare last year.
According to the PSA, the seasonally adjusted paddy production in the first quarter of 2015 stood
at around 4.75 million tons, down about 6.09% from around 5.06 million tons in the fourth
quarter of 2014. During this period, the seasonally adjusted farm gate prices of paddy and retail
and wholesale prices of rice declined by about 9.15%. 3.26% and 1.62% respectively from their
2014 Q4 levels.

Oryza Afternoon Recap - Chicago Rough

Rice Futures Give Back a Portion of
Yesterday's Gains as Outside Markets Weigh
on Prices
May 15, 2015

Chicago rough rice futures for Jul delivery settled 6 cents per cwt (about $1 per ton) lower at
$9.575 per cwt (about $211 per ton). The other grains finished the day lower as traders likely
took money off of the table ahead of the weekend; Soybeans closed about 0.4% lower at $9.5325
per bushel; wheat finished about 0.6% lower at $5.1100 per bushel, and corn finished the day
about 0.7% lower at $3.6550 per bushel.
U.S. stocks traded in a narrow range on Friday, following a record close on the S&P 500, as
investors eyed lower bond yields and the dollar, amid data releases. U.S. Treasury yields
extended recent declines, with the 10-year yield edging lower to 2.13% and the 30-year yield at
2.92%. The German 10-year bund yield declined to 0.62%. On Tuesday, bond yields hit sixmonth highs of 2.366% on the U.S. 10-year and 3.128% on the 30-year. Most analysts said the
moves in the fixed-income market remain within a range. The major stock indices fluctuated
around the flat-line, with the S&P trading briefly topping its closing high set on Thursday but
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holding below its intraday record. Stocks dipped, briefly extending losses, after the University of
Michigan's consumer sentiment report came in at 88.6, the lowest in 7 months. Adding to the
week's disappointing data, Empire Manufacturing data showed a reading of 3.09, below
expectations of 5 but above last month's negative figure. The Dow Jones Industrial Average
traded down 9 points, or 0.05%, at 18,242. The S&P 500 traded down 2 points, or 0.10%, at
2,119, with utilities leading six sectors higher and financials the greatest decliner. The Nasdaq
traded down 11 points, or 0.21%, at 5,039. Gold is trading about 0.1% lower, crude oil is seen
trading about 0.3% lower, and the U.S. dollar is seen trading about 0.2% lower at about 1:00pm
Chicago time.
Thursday, there were 458 contracts traded, down from 505 contracts traded on Wednesday. Open
interest the number of contracts outstanding on Thursday decreased by 54 contracts to 11,209

Oryza Overnight Recap Chicago Rough

Rice Futures Slightly Lower Overnight as
Market Weighs Meaning of Yesterdays Rally
May 15, 2015

Chicago rough rice futures for Jul delivery are currently seen paused 4.5 cent per cwt (about $1
per ton) lower at $9.590 per cwt (about $211 per ton) ahead of floor trading in Chicago. The
other grains are seen trading mixed overnight; soybeans are currently seen about 0.2% higher,
wheat is listed about 0.5% lower and corn is currently noted unchanged.
U.S. stock index futures indicated a higher open on Friday, ahead of some further data releases
and following a record market close on Thursday. Traders on Friday will focus on May consumer
sentiment and April's industrial production, after a week of mixed economic data pared economic
growth forecasts for both the first and second quarter. Empire Manufacturing data showed a reading of
3.09, below expectations of 5 but above last month's negative figure. The University of Michigan's
consumer sentiment is due at 10:00 a.m. ET. The U.S. dollar recovered slightly on Friday, but held near
recent lows, after the euro topped $1.14 for the first time since February on Thursday. European
equities were higher in morning trade on Friday as investor sentiment was buoyed by comments from
Mario Draghi, president of the European Central Bank.
Draghi said on Thursday that the central bank would "implement in full" its bond-buying
program, which would stay in place "as long as needed." U.S. stocks closed one percent higher on
Thursday as investors cheered further weakness in the dollar and calmer bond markets, amid mixed
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economic data. The S&P 500 set a new closing record with information technology jumping 1.7% to lead
all 10 sectors higher. Gold is currently trading about 0.7% lower, crude oil is seen trading about 0.5%
lower, and the U.S. dollar is currently trading about 0.5% higher at 8:15am Chicago time

Malaysia Targets 100% Rice Self-Sufficiency

by 2020, Says Agriculture Minister
May 15, 2015

The government of Malaysia is targeting to achieve 100% self-sufficiency in rice production by

2020, local sources quoted the country's Minister of Agriculture and Agro-Based Industry.The
Minister told local sources that the Agriculture and Agro-based Industry Ministry has decided to
spend about RM2.2 billion (around $615 million) this year to help rice farmers to improve
output. He noted that various strategies and plans, including upgrading of the irrigation system in
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the Muda Agricultural Development Authority (Mada) areas, are being considered to achieve the
target.
He said the farmers need to increase their yield to about seven tons per hectare from the current
six tons per hectare to reach the self-sufficiency target.Malaysia produces about 64% of rice
needed for annual consumption of about 2.8 million tons and imports the rest. The Minister
expressed that while 90,000 tons are imported officially, nearly one million tons are imported
unofficially into the country.USDA estimates Malaysia to produce about 1.8 million tons of rice
and import about one million tons of rice in MY 2014-15 (January 2015 - December 2015).

Philippines Begins "Bounty on Rats' Tails"

Program to Support Rice Farmers' Families
Ahead of El Nino

May 15, 2015

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The government of Philippines is taking proactive measures to limit production losses from El Nino
triggered droughts as well as support rice farmers' families, according to Bloomberg.The U.S. National

Oceanic and Atmospheric Administration, Australia and Japan Weather Bureaus declared the
onset of an El Nino. They noted that droughts in Australia and Southeast Asia would provide
with early indications of the intensity of the El Nino. A Bangkok-based senior economist at the
United Nations FAO told Bloomberg that if an El Nino aggravates drought conditions, rice
output in Indonesia, India, Bangladesh and the Philippines may be worst affected.
More than half of the provinces in the Philippines have been suffering from a dry spell and the
government is trying to reduce the impact of dry weather conditions on the rice output. It has
begun fast tracking irrigation projects, building systems to collect rainwater as well as seeding
clouds.Apart from agriculture related measures it is also trying out various programs that would
help in reducing crop losses due to pests and rodents as well as support farmers' families. For
instance the "bounty on rats' tails" program under which the government offers a kilogram of rice
for every 10 rat tails given by farmers. This program mainly helps crop losses from rats as well
as provides security to farmers. Farmers are understood to have taking up this program with a lot
of enthusiasm. They say they are also enjoying the rat food, which tasted like chicken. Some
farmers are known to have traded about 37,000 tails with the government.

USDA Forecasts 2015-16 Global Milled Rice

Production to Increase Due to Higher
Acreage
May 15, 2015

In its May Rice Outlook report, USDA forecasts 2015-16 global milled rice production at
around 482.1 million tons, up about 1.3% from an estimated 475.7 million tons in 2014-15 due to
an expected increase in rice acreage.USDA forecasts 2015-16 global rice acreage at around
161.9 million hectares, up about 1% from an estimated 160.2 million hectares in 2014-15 and
most of the increase in acreage is expected in Bangladesh, India and Thailand. USDA forecasts
the average global yield at 4.44 tons per hectare (on rough rice basis), fractionally below 201415.
Assuming normal weather conditions, USDA initially expects East Asia (161 million tons, 1%
increase y/y), Southeast Asia (118.2 million tons, 2% increase y/y), and Sub-Saharan Africa
(14.3 million tons, 2% increase y/y) to harvest record crops in 2015-16. It also expects South
Asia (152.4 million tons, 2% increase y/y) to harvest a larger crop. USDA forecasts Middle East
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rice production to increase 3% y/y to around 2.48 million tons.USDA expects higher production
in Ivory Coast, Nigeria, Myanmar and Japan in 2014-15. Increase in output from these countries
is expected to offset by a decline in production in Thailand and Madagascar, says USDA.

USDA estimates 2015-16 global rice consumption and residual use at around 489 million
tons, up about 1% from last year's 484 million tons. China accounts for the bulk of the projected
increase in global consumption, according to USDA. Rice consumption is expected to reach
record-high in Bangladesh, Myanmar, Cambodia, India, Indonesia, the Philippines, Thailand,
and Vietnam. Consumption is estimated to exceed production by 6.9 million tons.
The U.S. agency estimates 2015-16 global rice ending stocks to decline by about 7% y/y to
around 91.5 million tons. USDA estimates lower ending stocks in India, Indonesia and Thailand
but higher stocks in the U.S. It estimates 2014-15 global stocks-to-use ratio at 18.7%, down
from last year's 20.3%.

Tax on Rice Imports Pushes Up Bangladesh

Rice Prices, Say Millers
May 15, 2015

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The imposition of a 10% tax on rice imports
from May 10, 2015 is said to have a positive
effect on the rice prices in Bangladesh,
according to local sources.Some rice millers
have told local sources that their trading
activities had been affected by too much of
imports from India in the recent past. As
importers bought rice cheaply from India, they
could afford to sell at cheap prices locally but
local millers and traders could not afford to sell
at such low prices. Due to this reason, most of
the traders have been left with huge stocks with them. Therefore most of the millers were forced
to cut down production in most of their mills.
Private traders in the country imported about 1.36 million tons of rice as of May 12, 2015 in the
FY 2014-15 (July - June), about 3.6 times higher than 374,560 tons imported during the whole of
FY 2013-14, according to the Food Ministry. Prices were severely impacted in the beginning of
the Boro harvest season due to increasing imports. However, some millers told local sources that
the imposition of tax on rice imports has had positive effect on prices. They noted that prices of
BR-28 boro paddy variety have started increasing in most of the markets. The particular variety
of Boro paddy has been selling at around Tk 575 - Tk 650 per 40 kilograms (around $182 - $206
per ton) compared to around Tk 400 - Tk 500 per 40 kilograms (around $127 - $158 per ton) a
week ago.
A Food Ministry official expressed confidence that the government's procurement drive on May
30 will further push up the prices. The government has planned to procure one million tons of
2015 Boro (January - May) paddy and 100,000 tons of Boro rice between May 1, 2015 and
August 31, 2015. It has fixed the procurement price for paddy at Tk 22 per kilogram (around
$283 per ton) and that for rice at Tk 32 per kilogram (around $412 per ton). The government is
expecting an output of around 19 million tons from the current Boro crop.Bangladesh produced
around 34.449 million tons of rice, basis milled, in FY 2013-14 (July - June), up about 2.7%
from around 33.833 million tons produced in FY 2012-13, according to DAE data.USDA
estimates Bangladeshs MY 2014-15 (July 2014 June 2015) milled rice production to slightly
increase to about 34.6 million tons from an estimated 34.39 million tons in MY 2013-14. It
estimates Bangladesh to import 600,000 tons of rice in 2015.

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Thailand Rice Sellers Lower Some of Their

Quotes; Pakistan Rice Sellers Increase Most
of Their Quotes Today
May 15, 2015

Thailand rice sellers lowered their quotes for Hommali rice by about a $10 per ton to around
$865 - $875 per ton today. Pakistan rice sellers increased most of their quotes by about $5-$25
per ton. Other Asia rice sellers kept their quotes mostly unchanged today.
5% Broken Rice
Thailand 5% rice is indicated at around $370 - $380 per ton, about a $20 per ton premium on
Vietnam 5% rice shown at around $350 - $360 per ton. India 5% rice is indicated at around $370
- $380 per ton, about a $45 per ton discount to Pakistan 5% rice shown at around $415 - $425 per
ton, up about a $25 per ton from yesterday.
25% Broken Rice
Thailand 25% rice is shown at around $350 - $360 per ton, about a $20 per ton premium on
Vietnam 25% rice shown at around $330- $340 per ton. India 25% rice is indicated at around
$345 - $355, about a $5 per ton discount to Pakistan 25% rice shown at around $350 - $360 per
ton, up about a $5 per ton from yesterday.
Parboiled Rice
Thailand parboiled rice is indicated at around $370 - $380 per ton. India parboiled rice is
indicated at around $360 - $370 per ton, about a $50 per ton discount to Pakistan parboiled rice
shown at around $410 - $420 per ton, up about a $20 per ton from yesterday.
100% Broken Rice
Thailand broken rice, A1 Super, is indicated at around $315 - $325 per ton, about a $10 per ton
premium on Vietnam 100% broken rice shown at around $305 - $315 per ton. India's 100%
broken rice is shown at around $270 - $280 per ton, about a $25 per ton discount to Pakistan
broken sortexed rice shown at around $295 - $305 per ton, up about a $5 per ton from yesterday.

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