Market Commentary: 27-July-2021
These are turbulent times. Market swings are big and shipping has become a nightmare in terms of prices & availability of space/equipment. Rice markets look to remain bearish in 2H2021 as there is no immediate food crisis or FOMO when it comes to availability of food commodities. However, major concern remains moving goods from origin to destination. Shipping costs will remain bullish as availability of break-bulk vessels & container space remains squeezed for the foreseeable future. High shipping costs will keep fob quotes under pressure from all Asian origins.
Freight rates & container availability is relatively better in Pak at the moment as compared to IN/TH. We foresee increased buying interest for Pakistan current crop rice in coming weeks if prices drop further.
Pakistan will have a larger carry-over stock as compared to last year due to lesser exports (400-500k mt less export than last year). Expected fiscal tightening in next quarter will mean less holding power of new crop by hoarders/stockists. Volatility in the exchange rate will also play a pivotal role in dictating pricing & competitiveness.
We expect new crop arrivals in full-swing by second-half October.
Conclusion:
Global rice prices are likely to remain bearish in 2H2021 with reasonable tradeable stock levels on the horizon. Bears suggest the markets should weaken accounting higher shipping costs as 2021 draws on. But, never say never.
Weather disruptions, Chinese demand, trade disputes, food security & a COVID19 Delta resurgence are great fuel for any bull run & all have the ability to turn the best laid thoughts on their heads.
The future, like always, is a venture into the unknown.
Published by HAS Rice Pakistan trade desk, on 27-July-2021.