Rice Market Trends
Category Intelligence on Rice covers the following
- Information relating to market, supply, cost, and pricing analysis
- Hard to find data on cost and TCO models, supplier details, and performance benchmarks
- Macroeconomic and regional trends impacting cost, supply, and other market dynamics
- Category-specific negotiation and sourcing advice
Industry Outlook & Drivers
Global Rice Market Outlook
- The global supply of rice has been rising slowly at a CAGR of 1.4 percent over a period of five years.
- Prices have been surging in the market with improved consumption rates
- The key factors driving the growth include consumption of rice as a staple food, growing production in regions, like Thailand,Vietnam, and India, and demand for certain rice varieties from the regions, like the Middle East, for the use in delicacies and during festive seasons
- Animal feed producers procure large volume of broken rice, which could be more than 1,000 MT in six months. Ideally, a 3–6-month contract duration is preferred for this sector
- Food producers normally procure a small amount of rice, such as 200–500 MT, on a monthly basis. For this industry as well, a 3–6-month contract can be negotiated with the suppliers
- Thai rice prices are expected to witness an upward trend in the coming months.Thus, large buyers, who choose fixed-price contract (>3 months), can negotiate the contract length to three months to leverage on rising prices and achieve significant cost savings. Small and mid-size buyers can opt for spot buying in
- Rice market reports show that prices are expected to be on an increasing trend from May to August 2018, recovering from its lowest point. This could be the best price-lock period for contracts
- Indian rice prices could witness a downward trend in the future months. Thus, large buyers, who choose fixed-price contracts (>6 months) should reduce the length of their contracts to less than six months to leverage on falling prices and achieve significant cost savings.
- This month could be the best price-lock period for contracts
Global Supply–Demand Analysis
- Global production has risen slowly at a CAGR of 0.7 percent over the past five years, due to stable rice demand in global market, as rice is a staple food Although Bangladesh, China, and Indonesia rank highest in production, their consumption volume is equivalent. Therefore, these countries do not set the trends in the rice market as opposed to Thailand, Vietnam, and India, who are major players Est. Rice Production by Country
- The world's rice production is estimated to decline by 0.5 percent compared to the last year, due to recovery in Asian regions, like Thailand and India, from the last year's drought
- The production CAGR, over the past five years, has been 0.7 percent, which implies a slow, but an upward growth rate
- In the case of major rice producers, like Bangladesh, Indonesia, and China, the consumption volume is close to or higher than the production volume. Therefore, these regions do not play a major role in the global export market
- Countries, like India, Vietnam, and Thailand, who produce rice in excess of domestic demand, are the key regions influencing global rice trends
Global Demand Analysis
- China is the world's largest producer and consumer of rice. The country does not export rice, as the local demand is high
- India and Vietnam are the two major rice exporters among the top five consumers of rice. Thailand is the world's sixth largest rice producer and consumer as well as a major exporter
- The rice is mainly consumed as a staple food in these countries, and also for the use in delicacies, like biryani.
Est. Global Utilization of Rice (2019–20 E)
Global Rice Trade Dynamics
- The export market share of Thailand is expected to decrease by 12 percent, while India's share could escalate as an increase of 11.4 percent compared to 2016/2017. The latter could regain its position as the top global exporter, after Thai aromatic rice competed with Indian basmati rice and was leading as the top exporter over the past 4 – 5 years
- Rice trade volume has declined, owing to restriction on imports by Iran in the form of bans and high duties. The Nigerian import share dropped by 2 percent over five years, due to limiting imports in a drive toward self-sufficiency.
- The export share of Thailand has increased only by 4–5 percent over a five-year period, while India has grown by 1–2 percent and stands as the world’s top exporter of rice
- Thailand had been major sourcing destination, due to the potential for Thai aromatic rice to be used as a substitute for Indian basmati rice, with the former being available at more competitive prices
- China is the largest importer of rice, despite being the top rice producer, due to high demand
- Nigerian rice imports have dropped by 2 percent over a five-year period, as the country aims to restrict imports and become self-sufficient
- The Saudi Arabian imports have increased by 0.4 percent in five years, as the region is a major importer of basmati rice, which is used in the preparation of delicacies during festive seasons
Cost Structure Analysis - Rice
The total production and processing cost for basmati rice in India is ~₹51,951.5 /MT. Labor and land rent are the major cost components for rice cultivation. In case of Thailand, the production and processing cost for rice is ~$508.5 /MT, with fertilizers and chemicals, constituting the major cost component for rice cultivation.