MercoPress. South Atlantic News Agency

Mercosur forecasts excellent rice crop, but with India back in the market, prices are expected to fall

Record rice harvests in Uruguay but logistic costs are too high and tariffs are also a challenge

Mercosur is expecting one of the best rice harvests of the last decade, and particularly in Uruguay (exporter of prime quality rice), yields of harvested fields are indicating possible new records. However Uruguay rice farmers are facing trade, price and logistics hurdles, according to farmer Karol Pinczak.

“Harvesting is ongoing at a good pace, particularly in the north of the country with 70%, compared to 55% at national level. We’ve had some problems with rain, but this has not impeded harvesting at one of the best maturing moments for the cereal.”

Pinczak added that yields so far are encouraging, “on average 9,000 kilos per hectare, which is 10/15% higher than the previous harvest, and even when it has not been a record planting year, with the 180.000 hectares, we should have a record crop”..

However foreign markets are much less dynamic, “since India has re-emerged as a global supplier. India dominates world stocks and when they come in to the market, prices go down and buyers speculate”. (India held elections last year and PM Modi suspended exports to ensure a cheap supply for consumers).

Likewise, Brazil although an important producer is also a strong buyer of Uruguayan rice, and since Brazil devalued its currency 20% at the beginning of the year, this impacts directly on prices because of the new USdollar/Real Exchange ratio”.

Besides sometime in mid-May the Uruguay government is expected to announce a provisory price for rice, and much will depend on market conditions, “hopefully the ‘skid’ won’t be as strong as some farmers are forecasting.” Anyhow, “I much believe last year prices of US$620/US$630 the ton won’t be repeated”.

Last but not least, “Uruguay is an expensive country for any business. Transporting rice from the north and port and loading costs are very high compared to other countries, “added Pinczak. Uruguay also is forced to export 95% of its rice crop (over 1.4 million tons) because there is not enough domestic consumption, “we don’t have that resource to balance”.

The recently inaugurated Uruguayan president Yamandu Orsi has programmed a visit to Central America (Panama, Guatemala, Honduras) and Mexico and has included a delegation of people from the rice industry, expecting to promote sales in countries with a high consumption of rice. “This is a positive move, but we also need expert negotiators in tariffs, to be able to compete”.