Oct 05, 2020
Brazil Negotiating Rice Imports from non-Mercosul Countries
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Within a few weeks after Brazil temporarily suspended the tariffs on rice imports from non-Mercosul countries, the Brazilian Minister of Agriculture announced last week that Brazil has already negotiated 225,000 tons of rice imports from outside of Mercosul. The rice is from the United States, India, and Guiana and it should arrive in Brazil the second half of October and the first half of November. The suspended tariff was 10% for rough rice and 12% for processed rice and the suspension will stay in effect until the end of the year.
The USDA estimated that Brazil will import 108,300 tons of U.S. rice in 2020 making it the largest amounts of imports since 2003 when they imported 486,450 tons. According to Conab, domestic rice consumption in Brazil increased 5% since the start of the pandemic to 11 million tons annually. This increased consumption occurred when stocks were already tight at the lowest level since 2014.
As domestic rice consumption was increasing, Brazil was also increasing their rice exports. During the first nine months of 2020, Brazil's rice exports increased 65% to 1,207,000 tons. The steep devaluation of the Brazilian currency compared to the U.S. dollar stimulated rice exports as well as exports of soybeans and corn.
Rice is a staple of the Brazilian diet and the tight supplies have driven up the price of rice in the supermarket. The prices of other basic food stuffs such as cooking oil, dry beans, beef, and flour have also surged in recent months, which has resulted in steep food inflation.
The Brazilian government has authorized the importation of as much as 400,000 tons of rice from non-Mercosul countries in order to help stabilize rice prices. Brazilian farmers are also expected to respond to the high rice prices by increasing their 2020/21 rice production by 7.2% according to Conab. The 2020/21 rice crop in Brazil will start to be harvested next March.