Domestic japonica rice procurement progress accelerates year-on-year, prices overall stable with a slightly stronger bias
In early to mid-November, the harvest of the new-season japonica rice in Northeast China was basically completed, and japonica rice in Jiangsu and Anhui had also entered the final stage. Affected by weather, the quality of rice in Northeast China this year declined somewhat compared with last year. At the same time, boosted by policy-based procurement, various grain enterprises increased their market purchases, and market buying and selling gradually warmed up, but procurement prices were overall stable with a slightly weaker bias. In addition, because Northeast China has mostly had foggy weather recently, logistics and transportation have been affected to some extent, the volume of japonica rice shipped out of Northeast China has decreased somewhat, and sales areas have gradually increased their purchases of japonica rice from Jiangsu and Anhui. After experiencing a low opening and decline, japonica rice prices in Jiangsu and Anhui have also gradually stabilized recently.
Domestic japonica rice prices overall stable with a slightly weaker bias
The quality of the new rice in Northeast China this year declined somewhat compared with last year. Taking Heilongjiang as an example, rice harvesting in Heilongjiang Province has now ended. Affected by weather, the overall quality of rice this year declined somewhat compared with last year, mainly reflected in the milled rice yield. The milled rice yield of round-grain rice fell by an average of 1-2 percentage points compared with last year, with 67-68% being a high milled rice yield. The decline in milled rice yield of high-quality long-grain rice was even more obvious, falling by an average of 3-4 percentage points compared with last year, with most around 63%, but overall moisture was still acceptable. The start times of the minimum purchase price plans for mid- and late-season rice in various regions this year were earlier than last year, and japonica rice procurement prices received a certain level of support. It is understood that, as of now, the procurement price of long-grain rice in Harbin, Heilongjiang, is 3150-3300 yuan/tonne, the procurement price of long-grain rice in Jiamusi is 3000-3200 yuan/tonne, and the procurement price of round-grain rice is 2860-2960 yuan/tonne; the procurement price of super rice in Yushu, Jilin, is 2980-3160 yuan/tonne, and the procurement price of ordinary rice is 2940-3080 yuan/tonne; the procurement price of japonica rice in Taizhou, Jiangsu, is 2840-3020 yuan/tonne, and the procurement price of japonica rice in Nanjing is 2900-3060 yuan/tonne; the procurement price of japonica rice in Hefei, Anhui, is 2900-3040 yuan/tonne, and the procurement price of japonica rice in Suzhou is 2860-3000 yuan/tonne, all basically stable compared with last week, with increases and decreases in some areas basically within 20-60 yuan/tonne. Overall, with the increase in entities entering the market to purchase, japonica rice buying and selling gradually warmed up, and prices stabilized.
Domestic japonica rice procurement progress accelerates year-on-year
Statistics from the State Administration of Grain show that, as of November 10, various grain enterprises in 7 main producing areas including Heilongjiang and Jiangsu had purchased 10.46 million tonnes of new-season japonica rice, a large year-on-year increase of 1.19 million tonnes. Among them, the start time of the Heilongjiang japonica rice plan was 21 days earlier than last year, easing the pressure on farmers to sell grain and accelerating procurement progress. Monitoring by relevant departments also shows that, as of November 10, the proportion of japonica rice already sold by farmers in Northeast China accounted for about 25% of the province's output, 2 percentage points faster than the same period last year. Among them, the grain-selling progress of farmers' japonica rice in Heilongjiang was about 28%, 3 percentage points faster than the same period last year. Calculated on the basis of Heilongjiang's japonica rice output of 23.2 million tonnes and a commercialization rate of 85%, farmers still had 14.2 million tonnes of surplus grain available for sale. The main reason for the acceleration of japonica rice grain-selling progress this year was the earlier launch of the japonica rice market-support plan.
Old rice auction market attracts no buyers
⟦NL> Since the state's temporary storage early indica rice competitive bidding transactions restarted in mid-October, five old rice auctions have all ended with low transaction volumes or even failed auctions, reflecting that the current rice market's demand for old rice is weak, especially demand for old indica rice, which is very sluggish. The main reasons the old rice auctions attracted no buyers are as follows: First, the large-scale listing of new-season rice has hit demand for old rice. With market supply relatively ample, new rice is more attractive to market entities. Second, the price of old rice is basically not much different from the price of new rice. In recent early indica rice auction sessions, the transaction price was around 2640 yuan/tonne, while the procurement price of new-season early indica rice in 2015 was 2600-2680 yuan/tonne. Old rice has no price advantage over new rice, and rice processing enterprises mainly obtain old rice at auction in order to blend it with new rice to reduce costs. Therefore, when old rice has no price advantage, rice processing enterprises have very little willingness to participate in auctions to obtain old rice. Third, imported rice has hit indica rice. Since April this year, monthly rice imports have all exceeded the same period in previous years, and the price difference between domestic and foreign indica rice has basically remained at around 1000 yuan/tonne. Foreign rice has a fairly obvious price advantage over Chinese rice, so traders can profit from importing rice, leading to continuous increases in import volumes. This has increased domestic supply while also bringing enormous pressure to the buying and selling of domestically produced rice, especially a greater impact on the market for lower-quality indica rice.
Processing enterprise operating rates decline year-on-year
Since new-season rice came onto the market in September this year, rice market prices have shown a stable-to-declining trend. In particular, prices of by-products such as broken rice and rice bran fell noticeably. Most processing enterprises and traders believe that after the new grain comes onto the market, market supply will increase greatly, and in some producing areas warehousing capacity for market-support procurement is tight, so the intensity of market support may be less than last year. Given that grain sources are easy to obtain and price increases are unlikely, processing enterprises and traders have a relatively low willingness to build long-term inventories, in order to reduce occupation of warehouse capacity and funds. It is understood that at present the operating rate of medium-sized rice processing enterprises in Northeast China is about 40-50%, down about 10 percentage points from the same period last year. The main reason is that rice sales in sales areas are sluggish and processing enterprises have difficulty moving goods. It is understood that processing enterprises purchase new rice at a price of 3000-3050 yuan/tonne, and the ex-factory price of rice is around 4400 yuan/tonne, with a theoretical processing profit of 60-80 yuan/tonne.
As for the later market trend, the author analyzes and believes that, in an environment where the rice market as a whole has supply exceeding demand, japonica rice prices are expected to remain stable with a slightly weaker bias in the short term. Among them, the Northeast japonica rice market, supported by market-support procurement factors, despite some decline in the quality of new rice, will still see farmers' enthusiasm for selling remain undiminished as temperatures continue to drop, and its prices will still remain relatively stable. In Jiangsu and Anhui, affected by factors such as weak demand in the rice market and traders' low willingness to build inventories, the weak price trend will still persist for some time.