Brazilian paddy rice exports cool down

Following a successful month in July, the paddy rice market in the state of Rio Grande do Sul suffered a cooldown in the early days of August. The explanation is simple and clear: the Brazilian real appreciated in the international market, and the country lost competitiveness exporting grain as it had done for the previous 45 days.

The Brazilian paddy rice industry could not keep up with the raw material trade prices they could not pass to customers. As a result, quotations lost support, and several markets saw a retraction. On the other side, while being judged initially mild, the downward movement scared manufacturers, and supply surged.

With retail also reticent about purchases, the sector is strained between suppliers seeking to bargain under conditions of growing paddy rice prices and retailers seeking ever-lower costs for processed rice. As a result, quotes that reached R$ 80.00  (R$ 87.00 with freight and port costs) plummeted to R$ 77.00/78.00. There is also no export demand. As a result, they decreased to R$ 73.00 in Santa Catarina even when the deposited product is in liquidation.

Another factor impacting the Brazilian paddy rice export market, which is now the most costly in Mercosur, is the harvest in the United States. Brazil sold 400-500 thousand tonnes in the previous 45/60 days to be exported in the next 60/90 days. However, the country began to face more competition in the markets it competes with North Americans, the Americas, and the Middle East. The same is true for Uruguay, which is roughly $30 cheaper per tonne than Brazilian rice.

The Real-dollar exchange rate would have to return to R$ 5.30/ US 1.00 for business to ramp up again, as rice remains on the rise in the US.

See below the track record of Brazilian rice exports from January 2019 to June 2022. The chart below was designed with data collected by Datamar’s business intelligence team on the DataLiner platform.

Rice Exports from Brazil | Jan 2019 – Jun 2022 | WTMT

Source: DataLiner (click here to request a demo)

The expectation is that shipments in the next 60 days will be very limited, and so will be the negotiations led by trading companies operating in Brazil regarding paddy rice and processed rice unless there is a significant change in the exchange rate due to macroeconomic factors, the upcoming elections, or the suspension of exports from India that would raise world prices of rice.

Broken rice will continue to be strongly demanded by the pet food industry in Europe and the United States.

Trading companies expect stronger demand to return in November/December. As the leading importers in the Americas (Cuba, Mexico, Peru, and Venezuela) are expected to have smaller harvests, Mercosur’s hope remains for new, more significant business until the end of the commercial year.

Source: Planeta Arroz

To read the full original article, please go to: https://planetaarroz.com.br/exportacoes-esfriam-e-comercializacao-fica-em-stand-by/

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