VIETNAM WINS RICE EXPORT CONTRACT TO PHILIPPINES: Issue 30 April 14, 2013

By Rene Pastor

Vietnam has won a contract to export 187,000 metric tons of rice to the Philippines, the Vietnam Food Association (VFA) announced on the website of the Ministry for Agriculture and Rural Development.

The Philippines is one of the world’s top importers of rice although the government has launched a campaign to make the country self-sufficient in 2013. It is a goal that most rice analysts and traders believe will not be met this year.

The 25 percent broken rice was sold at a price of $459.75 per ton, above the market average of $365, according to the VFA. The rice will be shipped between April and June, the VFA said.

Vietnam will be exporting 2.2 million tons of rice in the second quarter of 2013, the VFA said while adding this includes an estimated 800,000 tons of rice in April alone.
The Philippine government’s National Food Authority (NFA), the body which makes sure rice supplies are stable, said it will be importing 163,000 metric tons of rice as part of trade obligations under the World Trade Organization.

Of the planned rice imports, some 98,000 tons will come from Thailand, one of the world’s top rice exporters, with 25,000 tons each coming from China and India, and the remaining 15,000 tons from Australia, the Philippine government had announced last week.

It seems the purchases from Vietnam will not be undertaken by the NFA and is being carried out by private buyers.

Rice stocks in the Philippines fell to a six-month low at the start of March, with government and commercial warehouses holding barely a month’s supply to feed the country’s nearly 100 million people.

The Agriculture Department said rice inventories as of March 1st, 2013 stood at 1.94 million metric tons, the lowest since Sept. 1, 2012. Since inventories reached 2.78 million tons on November 1st, the level of rice stocks has fallen over 30 percent, government statistics showed.

All the rice imports are being done ahead of the third quarter of 2013, when rice inventories in the Philippines seasonally drop to their lowest level for the year.

The Philippine Commodities Digest believes Manila’s total rice imports in 2013 will eventually reach at least 850,000 tons. U.S. agricultural experts from the USDA feel the imports would hit 1.5 million tons of rice. The experts’ forecast is not official USDA data.

The Philippine government is pinning its hopes on high-yielding seeds and improvements in infrastructure facilities, such as irrigation, to boost rice output in the country. But limits in the acreage planted to rice, historically low yields, and a surge in rice demand brought on by an increasing population may well blunt the government drive for self-sufficiency in rice.

ASIAN HARVEST PRESSURES RICE PRICES, CHINA BUYING SEEN TO SUPPORT MARKET
By Jack Scoville, The Price Futures Group

Rice continues to be a tale of two markets.

The Far East market remains weak. The harvests are starting there and demand is weak for this reason.

Vietnamese prices remain under pressure to work lower and have dropped in the past week. Even so, no one is really buying due to the harvest.

Production is expected to be strong throughout the region. The direction of prices there will depend on China, which has big problems with food safety these days due to the bird flu epidemic. Eleven people have died. Dozens have been made sick.

This is not the only problem there as rice safety has been questioned as well. The water used to produce the rice can be contaminated and there have been problems with it reported in the recent past.

China has been a strong importer of rice, and we don’t know how much they have bought in the world and how much has moved over land where smuggling is easier. But they have bought a lot and it looks like they will continue to buy, and might even buy soon from the U.S.

Chinese demand alone might be enough to keep rice prices in Asia stronger than might be expected given the bearish talk in the region.

Here in the West, the supplies remain tight, and prices have generally been heading higher. Our situation here in the U.S. is one of less and less stocks as demand remains strong.

There probably will be little help from South America as crop estimates from our sources and the official data are dropping. Prices in the West will remain elevated as buyers in this part of the world do not like the quality of rice grown in the East.

There have been imports at times from various countries, but only imports by the U.S. of Asian rice keep happening.

The U.S. imports a percentage of its rice each year. Part of this demand is for the Asian market here. Asians prefer their rice to that grown here, or at least some of them do. We also import aromatic (rice) from Pakistan, India and Thailand.

The Middle East market is interesting right now too. Indian Basmati prices are sky-high due to demand from Iran. Par boiled prices are not nearly as strong, but India seems to show little interest in selling it. They are more excited about exporting wheat.

Pakistan has been exporting, though, and getting some pretty good prices as India is mostly out of the market.

BUYING AND SELLING PRICES OF RICE FROM THE NATIONAL FOOD AUTHORITY (in Philippine pesos per kg) As of April 12, 2013

selling

buying

PROTECTING ITS MINING INDUSTRY, MANILA PURSUES EITI CANDIDACY
By Rene Pastor

It seemed innocuous enough and something the government of President Benigno Aquino should be doing all along.

The Philippine government is working hard to gain membership in the Extractive Industries Transparency Initiative (EITI). The target apparently is to win EITI approval at its next global conference in Sydney, Australia, on May 23 and 24.

It seeks to establish a global standard where those involved in extractive industries — mainly mining – report how much the company pays and a government acknowledges how much its receives. The people of a country can then review the figures.

“The EITI is a coalition of governments, companies, civil society groups, investors and international organizations,” its website says.

The move by Aquino’s government is motivated by two things.

One is good governance and transparency, something that Aquino has made a bedrock of in his administration. The other of course is political calculation.

By joining EITI, the Philippine government will help blunt the efforts of activists opposed to any mining whatsoever in the country.

Effectively, the Philippines can claim that it is responsible in ensuring that extractive industries benefit Filipinos and that it is going to all the trouble of making sure that any revenues can be tracked by independent groups.

EITI of course will not stop corruption in mining.
Come to think of it, international treaties signed by governments are often notable for how many times they are violated.

“We hope that this will also lead to improvements to tax collection processes, as well as enhance the thrust and stability in the extractive industries,” Elisea Gozun, the presidential assistant on climate change, said at a briefing.

It seems ironic that the first country in the region to join EITI is the former East Timor. Indonesia and the Philippines are now trying to play catch-up. Since the Philippine government has opted to actively support mining, it seems prudent it will join EITI even if there is some skepticism about its motives for doing so.

WEATHER PROBLEMS IN U.S., OTHER COUNTRIES MAY SOON SPARK GRAINS COMPLEX
By Jack Scoville, The Price Futures Group

Corn, soybeans and wheat have been under some price pressure in the last few weeks, mostly due to increasing movement of products in South America.

But the situation here in the north needs to be watched and might get bad enough soon to turn the trends in prices to up no matter what is available down south.

We have a developing weather problem here. The fact of the matter is that temperatures have not warmed up and farmers are having trouble getting into the fields to work.

The situation does not look to get better anytime soon as storms move from west to east and the cold weather does not go away.

It is too early to talk of losses in yields or switching from one crop to another, but the days are moving and the talk will start if the weather does not improve soon.

The U.S. and Canada are not the only countries with bad weather right now. It is too dry in Australia, and cold weather is reported in Europe, Russia, and parts of China.

It is not wise to be too bearish on prices just now, and good coverage of needs for the next couple of months is still advised.

Extended coverage of needs might become a necessity soon if things do not change. Especially for corn and wheat.

PHILIPPINE GROWING WEATHER OUTLOOK FROM GOVERNMENT PAGASA FORECASTING AGENCY AS OF APRIL 15, 2013

There are no tropical typhoons threatening the Philippine archipelago or its rice-growing areas as the country is in the middle of its summer season, the government’s Pagasa weather forecasting agency said.

The country will have generally good weather aside from isolated rain showers or thunderstorms.

The dry season in the Philippines normally runs from late November to May of the following year. The rainy season, when an average of 20 typhoons hit the Philippines, normally begins in June.

PALM OIL OUTLOOK: FIRM DEMAND KEEPING VALUES SUPPORTED
By Jack Scoville, The Price Futures Group

Palm oil got some bullish news from MPOB (Malaysia Palm Oil Board), but did not react all that well.

Some of the weakness had to do with ideas that a seasonal increase in production is coming. Some was due to weakness of prices in Chicago and in competing vegetable oils.

But the demand has been better for palm oil than the trade expected. And given the situation here and in the northern half of the world in general, the market might find its legs and hold rather than work lower.

Traders are worried about demand in general, and most specifically from Europe. As noted, the demand has held together rather well.

The down side in prices for palm oil should be rather limited. Speculators have been selling and prices should hold once the selling from them has abated. That could be as soon as this week.

USDA PACIFIC NORTHWEST WEEKLY GRAIN SUMMARY FOR THE WEEK ENDING APRIL 11, 2013

May wheat futures ended the reporting week on Thursday, April 11, higher, as follows compared to last Thursday’s closes: Chicago 3.75 cents higher at 6.9775, Kansas City 17 cents higher at 7.3875 and Minneapolis three cents higher at 7.8950.

Chicago May corn futures trended 21.25 cents higher at 6.5125 while May soybean futures closed 30 cents higher at 14.02.

Grain futures were higher for the week. Supportive factors to the higher wheat futures were continued trade concerns over the dry conditions in the Southern Plains and planting delays due to freezing temperatures and snow in North Dakota, a higher-than-expected inspected-for-export figure for the week ending April 4 of 27.2 million bushels (mb), spillover support from the higher row crop futures on Monday, and historically poor crop condition scores.

Corn futures were supported during the week by potential planting delays due to higher rainfall amounts and potential flooding, spillover support from the higher wheat futures on Monday, strong ethanol margins, higher outside markets on Tuesday, and a bullish USDA supply and demand report.

Export inspections continuing to be higher than what is needed to meet USDA export estimate, tight world pipeline supplies, good crush margins, and a bullish USDA supply and demand report released on Wednesday were supporting factors to the higher soybean futures for the week.

USDA World Supply ending stocks are estimated for 2012/2013 for April are as follows: 178.23 million metric tons (mmt) for wheat, 182.26 mmt for corn and 62.63 mmt for soybeans. U.S. ending stocks are estimated at 731 mb for wheat, 757 mb for corn and 125 mb for soybeans.

CASH BIDS FOR WHEAT AND CORN AT PORTLAND AS OF APRIL 11, 2013: USDA

Cash wheat bids for April delivery ended the reporting week on Thursday, April 11th, mixed compared to week ago bids for the same delivery period. Hard red winter wheat bids trended higher, while dark northern spring wheat and soft white wheat bids were lower.

Bids for US 1 Soft White Wheat delivered to Portland in unit trains or barges during April trended 2.25 to 15 cents per bushel lower than last Thursday’s noon bids for April delivery. Some exporters were not issuing bids for nearby delivery.

Bids for 11.5 percent protein US 1 Hard Red Winter Wheat for April delivery advanced by 17 to 22 cents per bushel compared to last Thursday’s noon bids for the same time period supported by the higher Kansas City May wheat futures, and a higher basis bid by some exporters.

On Thursday, bids were as follows: April 8.7375-8.8375, mostly 8.7775; May 8.6375-8.7875; June 8.5150-8.8150; first half July 8.3650-8.6650, last half July 8.2650-8.4650and August New Crop 8.2375-8.3375.

Bids for non-guaranteed 14.0 percent protein US 1 Dark Northern Spring Wheat for April Portland delivery trended two to 12 cents per bushel lower compared with last week’s noon bids for April delivery. A lower basis bid by most exporters weighed on bids, despite the higher Minneapolis May wheat futures.

Protein scales for non-guaranteed 14.0 percent protein were plus zero cents each 1/4 of a percent of protein up to 16 percent protein and minus four to five cents each 1/4 of a percent of protein down to 13 percent protein.

On Thursday, bids for non-guaranteed 14 percent protein were as follows: April 9.1450-9.2450, mostly 9.2050; May 9.1450-9.2450; June 9.0450-9.1450; July 8.8950-8.9950 and August New Crop 8.7425-8.9425.

Bids for US 2 Yellow Corn delivered to Portland in single rail cars were 276.75-278.00, 7.50 to 7.75 per ton higher than last Thursday’s bids of 269.25-270.25. Bids for US 2 Yellow Corn truck delivered to the inland feeding areas of Yakima, Washington, and Hermiston, Oregon were 279.00-282.25, 7.50 per ton higher than last Thursday’s bids of 271.50-274.75. Lower Chicago May corn futures pressured the cash corn bids.

COLUMBIA, OREGON GRAIN VESSEL UPDATE AS OF APRIL 11, 2013: USDA

There were 10 grain vessels in Columbia River ports on Thursday, April 11, with five docked compared to seven last Thursday with four docked.

New confirmed export sales this week were to Japan and Taiwan.

Japan purchased the following U.S. wheat in metric tons: 32,877 of minimum 11.7 percent protein hard red winter wheat for May 21-June 20 shipment, and 19,845 of maximum 10.5 percent protein western white wheat and 22,373 of minimum 14 percent protein dark northern spring wheat for delivery by July 31.

Taiwan purchased the following wheat in metric tons for May 15-29 shipment: 10,400 of 9 percent protein western white wheat, 14,180 of 12.5 percent protein hard red winter wheat, and 21,800 of 14.5 percent protein dark northern spring wheat. Taiwan also purchased the following wheat in metric tons for June 1-15 shipment: 13,050 of 12.5 percent protein hard red winter wheat, and 24,550 of 14.5 percent protein dark northern spring wheat.

Outstanding U.S. white wheat export sales as of April 4, 2013 for the marketing year beginning June 1, 2012 and ending May 31, 2013, totaled 572.3 thousand MT compared to 653.3 thousand MT on March 28, 2012, and 1263.6 thousand MT one year ago.

Outstanding white wheat export sales for the 2012-2013 marketing year were to the following countries in 1000 MT:
Japan 106.8
Yemen 100.00
Philippines 85.0
South Korea 79.0
Thailand 39.4
Taiwan 10.1
Nigeria 8.7
Burma 1.9
Canada 1.6
Malaysia 1.5
Sweden 0.5
Hong Kong 0.3
Total unknown 137.5.

Accumulated white wheat export shipments as of April 4, 2013, in 1000 MT for the 2012-2013 marketing year, totaled 3971.9 compared to 4539.5 one year ago.

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