Présentation PowerPoint - AXA Corporate Solutions

Dark clouds over the International rice market in 2013?

Facts
Rice as a cereal grain is the most
important staple for a large part of the
world’s human population, especially in
Asia and the West Indies & Africa.
It is the second largest planted grain,
after maize .
World production is 681 mio mto (paddy)
World trade however is a fraction 25-30
mio mto

)Basis paddy production
People's Republic
197.2
of China
India 120.6
Indonesia 66.4
Bangladesh 49.3
Vietnam 39.9
Myanmar 33.2
Thailand 31.5
Philippines 15.7
Brazil 11.3
United States 11.0
Japan 10.6
Cambodia 8.2
Top rice
producers

Top rice exporters
Milled.
2011 2012
Thailand 9.4 6.0
India 2.2 7.5
Vietnam 6.7 6.8
Pakistan 3.5 3.0
USA 2.8 2.5
Bra/Urg/Arg 1.8 1.5

The Thai government rice
intervention scheme
When the system was introduced it was
based on a S & D which would have put
Thailand in the driving seat of the
market
What went wrong
India re-entered market

The Thai government
intervention scheme.
The decision to do the rice scheme in
Thailand was based on the following S &
D. (milled)
Vietnam 6.0 mio
Pakistan 3.5 mio
USA
2.5 mio
Latin America 1.5 mio
Others
1.5 mio Total 15 mio
With a minimum of 26 mio world demand
Thailand could have supplied the 10-11
mio at any price.

The Thai government rice
intervention scheme
Definition of cornering the market
To corner a market is to get sufficient
control of a particular stock of a
commodity or other assets to allow the
price to be manipulated

Price development Nov-
Oct11/12
Thailand Vietnam Pakistan/India Support price
$700
$650
$600
$550
$500
$450
$400

What went wrong
Indian suddenly was able to release a 7
mio mto in the market which created
havoc in the S & D calculations.
Thailand demand got a hit and Thailand
could not set prices anymore.
Exports by Sept 30 have been only 5
mio which is 44 % below last year

The Thai Government
intervention scheme
What is history telling us?
Hunt Brothers
Quality Spice

Silver Price bubble in 1980

Black pepper price USA 1986-
1988
Black pepper price EX warehouse N.Y.
5000
4000
3000
2000
1985 1986 1987 1988

Some quotes from the press
If we can collaborate with Vietnam, we would
be able to fix the price ourselves.
The mortgage program will be justified in
about eight months from now, when world
prices increase much higher
The mister revealed that Thailand sold 7 mio
mto on G to G basis
Dismissing reports that Thailand is desperate
to sell rice from its record high stockpile of
about 11 million tons to make space for the
new harvest, the minister said that the country
can store another 20 mio mto of rice in the
warehouses

The Thai government rice
intervention scheme.
So it will not a question if this scheme
folds but when!
This time it will not be not a money issue
but Thailand will run out of storage
space to store the rice.
Conclusion:
When this happens Thai rice will have
to find normal commercial ways to catch
buyers!!! Thus….

Thank you for your attention