Temporary storage early indica rice auctions restart, rice market to remain under pressure later
It is understood that on October 13, 2015, China once again launched auctions of early indica rice from temporary storage, at a time when the government price-support purchase of the new-season early indica rice had just ended and new-season mid-to-late indica rice was coming onto the market.
China's most recent auctions of temporary-storage early indica rice began on October 21, 2014, and ran until July 14, 2015, with one auction per week and an offering volume of about 500,000 tonnes each week. However, the results were less than ideal, with failed auctions predominating. Apart from one auction linked to imported rice quotas, which saw relatively brisk sales, only 18 others concluded any sales at all, and the sales rate was extremely low; all the rest failed to sell.
⟦NL> After July 14, because new-season early indica rice came onto the market, the state suspended auctions of temporary-storage early indica rice. In 2015, the new-season early indica rice entered government price-support purchasing, and market purchase prices basically stayed around the support price of 135 yuan per 100 jin. Market buying and selling were relatively quiet, and the price-support purchase period ended on September 30, 2015. Then, on October 10, 2015, the state announced plans to hold another auction of temporary-storage early indica rice on October 13, with a planned sale of 497,000 tonnes of early indica rice. On the one hand, this was because there was virtually no new-season early indica rice supply on the market, so the state released temporary-storage early indica rice to adjust the market; on the other hand, early indica rice still urgently needed to draw down its stockpiles.
According to remote sensing monitoring by China Grain Network, China's new-season early indica rice output in 2015 was about 29.8846 million tonnes, down 3.81% from the previous year. Although output fell slightly year on year, it was still relatively large.
It can be seen that in the past two years, China's early indica rice has basically maintained a fluctuating trend, with only small price swings. This is mainly because in recent years low-priced imported rice has hit the domestic market, and at the same time the supply pressure of China's early indica rice has been growing day by day, while demand has not improved, creating a situation in which supply far exceeds demand.
According to customs data, between January and August 2015, China imported 1.96 million tonnes of rice, an increase of about 18% from 1.65 million tonnes in the same period of the previous year.
At present, new-season mid-to-late indica rice is coming onto the market in the south, and japonica rice in both the north and south is also successively coming onto the market, further increasing the supply of raw grain on the market; as the end of the year approaches, the quota utilisation rate rises, and the volume of imported rice may further increase. It is expected that sales of early indica rice at auction will not be very brisk, and the probability of failed auctions is relatively high. Before the end of the year, early indica rice prices are expected to remain in a weak and fluctuating pattern.