Global rice market shook because of China
In the world rice market, a large and unexpected buyer has emerged over the past year. That is China.
The Wall Street Journal said that over the decades, China's booming rice production allowed it to export net rice. However, the world's largest rice consumer has now become a big importer of rice.
According to data from the US Department of Agriculture, in 2012, China imported a record grain of 2.6 million tons. The trend to boost its rice imports began in 2011, the year China imported 575,000 tons of rice. For the past 40 years, China has only four years of net rice imports.
China's move has caused worries and controversies in the international rice industry as analysts and traders try to understand the reason behind the dizzying demand for rice in the country. What does this mean for international rice prices as well as the global economy?
Some analysts believe that China's push to buy rice comes from strong demand from consumers. The view that although China has increased rice production for nine consecutive years, the current level of production is still not enough to meet domestic demand. If this is true, China's increased rice imports could be the start of a major and lasting shift in the global rice market. If so, there are concerns that the world will have enough supplies of rice, and the price of rice will rise.
"If the pace of Chinese rice imports remains the same this year, the worry is whether the rest of the world will be able to compensate for China's lack of rice," said Cheng Fang, a senior economist at the United Nations Food and Agriculture Organization (FAO) said.
Some other experts give a simpler reason. They said that the price of rice set by the Chinese government is too high compared to the price of rice equivalent in the international market. So that Chinese traders buy cheaper rice from Vietnam, Pakistan and India to bring back the country to make big profits.
This has been more profitable in recent months. According to traders, in mid-December last year, Vietnam's average rice price was about $ 410 / tonne, compared to the same price in China of $ 635 / tonne.
"There are two separate rice markets in China," said Thomas Pugh, a commodity economics expert at London-based Capital Economics. Chinese farmers sell rice to the government, but consumers buy rice from overseas. As a result, a large amount of government-purchased rice is stored, instead of being processed and consumed. Once the gap between the price of rice in China and the world is narrowed, its rice imports will fall back.
Whatever the argument is, China's sharp increase in rice imports has had a major impact on world rice prices. If it comes from rising demand for rice, this trend could push up world rice prices over the next few years or even decades. If this is a response to China's government's rice price policy, global rice prices may fall into vulnerability if the policies are reversed.
At present, world rice prices are mainly set between governments and large customers. In the US, the price of rice futures has narrowed the fluctuation range over the past year, mainly because China did not buy rice from the United States. Some rice farmers in the United States have noticed this and urged the US Department of Agriculture and Chinese authorities to export US rice to China.
The policy direction of China's rice prices is important, because rice is the staple of more than half of the world's population. Rice prices are one of the focus of international economic experts. Rising rice prices may push up prices for other foods such as wheat and corn. In 2009, a sharp increase in prices pushed prices for other major grains to climb.
Most of the major rice consuming countries are also major producers of rice, making global rice a small part of the world's rice production. In 2012, only 37.3 million tonnes of rice were traded globally, accounting for 7.7% of total production, according to FAO data. China consumes about 140 million tons of rice a year, so any fluctuation in China's rice imports could have a big impact on world rice prices.
Some FAO analysts are trying to dig deeper into China's rice stocks. The experts said that the increase in rice imports and high domestic rice prices suggest that China's stockpile may not be as large as expected.
China's increased rice imports have prompted FAO to question its own estimate of China's rice stocks. At present, FAO estimates that China had 93.7 million tonnes of rice stocks by the end of September. The amount of rice in stock is enough for the whole of China to eat for eight and a half months, an unprecedented level.
"We think the estimates are too high," Fang said, adding that FAO is working with the Chinese government and will revise the data after conducting investigations and analyzes. Accomplishments. There are no official figures for rice stocks in China, as much of this rice stock is in the hands of farmers and is difficult to quantify.
Figures from the US Department of Agriculture also show that China's push to import rice is also partly due to the country's need for more rice. The US Department of Agriculture estimates that China's demand for rice will exceed 1 million tonnes of rice this year and 2014 will be another year of net rice imports from China. By the end of June-July harvest, China's stockpile of rice was estimated at 45.85 million tons, less than four months of consumption.