Forget Selling Tea to China, U.S. to Sell Rice to No. 1 User

  • China is world's biggest producer and importer of rice
  • China currently gets most of its imports from Vietnam

U.S. rice producers are about to get access to China, the world’s largest market for the grain, after 15 years of lobbying.

China has requested that the so-called phytosanitary protocol for rice be signed in Beijing, Dwight Roberts, president of the Houston-based U.S. Rice Producers Association, said in an e-mail, without providing a date. In a statement on Monday, the association said it was expected to be signed next week during Chinese President Xi Jinping’s visit to Washington.

“It’s a significant event that they would buy rice from the western hemisphere,” Milo Hamilton, president of Austin, Texas-based Firstgrain, a rice-trading advisory company, said in a telephone interview. The accord “does not mean they will buy rice from the U.S. It means they can buy rice from the U.S.”

China is the biggest producer and importer of rice. While it’s still largely self-sufficient, its imports have gradually climbed in recent years. Inbound shipments of milled rice are expected to be 4.7 million metric tons in the 2015-16 marketing year, up from 540,000 tons five years earlier, according to U.S. government data.

Long Process

Most of the imports come from neighboring Vietnam because of “price, proximity, and quality,” the producers association said. U.S. sellers haven’t been able to ship to China because rice wasn’t included in earlier trade negotiations that now allow the annual sale of millions of tons of other American agricultural commodities including soybeans.

“When we started on this process, China wasn’t involved on the international marketplace,” Roberts said in a telephone interview. “We’ve learned that things change. We’re at the end of a long process.”

In the short term, China may import 200,000 to 250,000 tons of high-quality U.S. rice per year, providing a "significant boost" to the American industry, the group said. In total, the U.S. is expected to export 3.08 million tons in the year that began Aug. 1, down from 3.21 million in the prior year.

The U.S. is forecast to produce 6.02 million tons, equivalent to about 4 percent of Chinese output.

Rough-rice futures for November delivery on the Chicago Board of Trade retreated as much as 0.4 percent to $12.92 per 100 pounds on Wednesday. On Tuesday, futures snapped an eight-session rally that was the longest for a most-active contract in two months. Prices rallied on Sept. 14 to their highest intraday level since July 2014.

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