This is probably no secret for most rice producers: the rice market differs from other commodity markets in that it is primarily dominated by India and China.

According to Milo Hamilton, co-founder and chief agricultural economist at Firstgrain Inc., which publishes a newspaper for farmers and rice buyers, the market of 1.4 billion people has “no impact” on rice.

China is both the largest exporter and largest importer of grains, so movements out of that country could lead to anomalies in the rice market, such as using rice to feed livestock, which would likely never happen in the United States.

Hamilton believes China may have shipped as much as 50 million tons of rice for livestock due to high corn and soybean prices in recent months.

Speaking of the prospects for rice at the Mid-South Farm and Gin Show in Memphis, Tennessee, Hamilton said, “That number may not seem like a lot right now, but remember, 50 million tons is a lot more than anything else in the world.” western hemisphere produced rice – about 5% of world rice production.”

“China consumes a lot of rice for animal feed and it’s hard to see that in its inventories because China’s rice production keeps growing,” he noted, suggesting referring to the chart showing the ending stocks of major rice exporters. “But no one is really sure what is happening in China. That’s why the US Department of Agriculture (USDA) gives the numbers with and without [tác động từ] China”.

influence of Ukraine

Though markets are very varied, Hamilton said he keeps an eye on rice and wheat prices in the news due to the Russia-Ukraine conflict. Wheat prices have risen sharply in a few days as Ukraine is a major exporter.

On February 26, he said: “Because of what happened last week (Russia-Ukraine conflict), rice prices are at a new low compared to wheat. As someone said this week, because with rice, sometimes nothing happens for decades, and then decades of change happen in a week. We don’t even know their full meaning.”

“I speak and read Russian fluently and I know there is no relationship between Russia and Reis, but it might spread to other regions,” he added.

Hamilton says he’s noticed in his 40 years of trading in the rice market that the rice/wheat ratio can get very low and then reverse itself.

“There are various reasons why this is happening, but we currently have a very low rice-to-wheat price ratio (0.8),” he noted. Over the next six months, I don’t expect rice prices to be low in the US. It will increase.”

drought in South America

Unlike other commodities, rice prices have been falling for most of 2021. However, Hamilton said drought conditions in Brazil and Paraguay, which have helped push up soybean prices, could also be a factor.

Rice growers in the Mid-South should keep an eye on three markets – the US, South America and Asia. “Three markets should be considered simultaneously,” he said. Sometimes one or the other market is not important, but the key market is Brazil. The country is the largest producer and consumer of rice in South America and a net exporter of rice to the world market.

“If Brazil has a lot of rice, this country can affect our rice exports to the Gulf. In January, when everyone saw a downward trend in the Brazilian market, I said it was necessary to keep an eye on the situation. And guess what happened? Rice prices have increased by 30% in the last three months. I don’t think this bull market is over because Brazil is having a drought that is affecting corn and soybean production. Rice is also affected,” Hamilton said.

The Parana Basin (in southern Brazil near Paraguay) is dry. “Paraguay sells rice to Brazil, and if Paraguay lacks rice to sell to Brazil, Brazil will stop exporting a lot of rice. It’s a very simple phenomenon and I don’t know when Brazil’s rice exports will stop.”