Rice imports by China, the world’s largest producer, may cause a shortage and spark a rally in prices in lean production years, said Li Qiang, managing director at Shanghai JC Intelligence Co.
China quadrupled imports in 2012 to become the second-largest importer, from the 18th biggest in 2011, amid record production, the U.S. Department of Agriculture said Dec. 11. The country imported 2.6 million metric tons of rice in 2012, compared with 575,000 tons a year earlier, and will import 2 million tons this year, the USDA said.
Rising imports by China, the largest consumer, may bolster prices even as world stockpiles tracked by the UN’s Food & Agriculture Organization swell to a record with the biggest global crop ever. While rice, the staple for half the world, has risen 3 percent in Chicago in the past year, it is 18 percent below a three-year high in September 2011. Most purchases by China, which typically imports from Thailand, were from Vietnam this year.
“Rice demand and supply in China needs to be closely monitored in the future to see if such a rising trend of imports will persist,” Li said. “That could present a challenge, especially when problems such as weather or pests reduce output in the neighboring countries.”
The FAO is reviewing its estimates of China’s stocks, said Cheng Fang, an economist at the Rome-based UN agency.
“We are working to improve China’s rice stockpiles, especially stock on farm,” Fang wrote in an e-mailed reply to questions. “We hope to get some information from rural household survey data. But the work is still ongoing.”
The country may import less this year because the central and provincial governments boosted spending on subsidies to farmers in an effort to ensure self-sufficiency, Li said.
“Some Chinese traders were able to take advantage of the cheap foreign rice last year, and it’s purely for profits,” Dong Shuangwei, a research manager at Beijing Capital Futures Co., said by phone. “It’s unusual and probably not a fundamental shift because China still produces enough rice to meet its own consumption.”
China produced 143 million tons of milled rice last year, while consumption reached 144 million tons, according to the USDA. While there’s no shortage in China, processors increased imports to profit from the difference between domestic and overseas rates, Bai Peipei, an analyst at Beijing Shennong Kexin Agribusiness Consulting Co., said on Dec. 12.