For two years now, Brazil has been en-
gaged in signing a trade agreement that
guarantees exports to Mexico, a market
of great interest. The jittery relations be-
tweenMexicoandtheUnitedStates,along
with the positions assumed by president
Donald Trump could favor Brazil’s en-
trance into the territory of North America.
However,thereareproblems.Whileittook
threemonths for Paraguay to approve the
export agreement, the Brazilian process
has remained jammed for two years. Nov-
elties are expected before the end of the
first half of 2017.
n
n
n
Long live México!
Relief
window
Exports,despitethelossincompetitiveness
inthe2016/17cropyear,havebeen
thebalancingfactorbetweenofferand
demandandpricesintheBrazilianmarket
In an atypical year, the 2016/17 crop resulted in a downfall in trade balance
L
ow competitiveness determined by
the relation of the domestic prices
way above the international ones,
the exchange rate and the produc-
tive fall affected the trade balance of
rice in the 2016/17 commercial year. For the
first time in six seasons, the Country endured
a net deficit, which amounted to 292.7 thou-
sand tons. The Country exported 894.7 thou-
sandtons(riceinthehusk)andimported1.187
milliontons.
For the new season, the National Food
Supply Agency (Conab) expects a balance of
trade with the exports of 1.1 million tons and
imports of an equal volume. Market agents,
however, are considering the perspective of
a new deficit, from300 to 400 thousand tons,
which could increase the ending stock in
March2018.
The stronger demandof thenationalmar-
ketbyvirtueofthesmallercropinthe2015/16
crop year and the competitiveness of Merco-
sur countries, especially Paraguay, where the
production costs amount to only US$ 11 per
sack, generated the reversal of the flow that
had been the course over the past years. Bra-
zil remained outside the most highly valued
export markets over most of last year, taking
advantageof goodprices and fiscal advantag-
es. The Northeast and Rio Grande do Sul ac-
quiredmorericefromUruguayandArgentina,
viacoastwiseshipping.
Brazilian exports are vital for keeping the
balance of prices fetched by the farmers and
paid by the consumers over the year, despite
COMPENSATION
Thequalityofthe
riceproduced inRioGrandedoSul and theef-
fort of the supply chain in shipping the cere-
al abroad are being compensated. This is the
opinion of the president of the Rio Grande
do Sul Rice Institute (Irga), Guinter Frantz. “In
general, we had a favorable decade in the for-
eignmarketandagoodinfluenceondomestic
prices”, he notes. “Now the sector is engaged
inconsolidatinga structureand inconquering
markets that keepexports at onemillion tons,
at least. It is a big challenge, and the supply
chainisusedtofacingbigchallenges”.
According to him, in 2016 a commercial-
ization windowwas created in the first half of
the year because of the low local prices and
off-season in the United States, which com-
petes with Brazilian rice in the Americas. “We
kept our share in sales of broken rice toAfrica,
a segment that is nowon thedeclinebecause
prices are falling as a result of rising supply in
Asia”, explains Pércio Grecco, director of Rice
Brazil, and export company. In Grecco’s view,
Brazil needs to evolve in logistic quality, turn
theprocesses lessbureaucratic, and the same
holds true for taxation rates, aswell as formal-
ize trade and sanitary agreements with other
countries.“Nonetheless,ifpricesappeal,there
willbebuyers”,hesummarizes.
In his view, Brazil should resume more ef-
fective sales as of late April 2017, taking ad-
vantage of the off-season in theUnitedStates,
along with lower domestic prices. In general,
market agents bet on a newdeficit in the bal-
anceoftradeinthe2017/18commercialyear.
someoccasionalmomentsinwhichsupplyor
demand pressure and the exchange rate in-
terfere with the market, says Anderson Bello-
li, executive director at the Federation of Rice
Growers Associations in Rio Grande do Sul
(Federarroz). Over the six past seasons, Bra-
zil exported 9.3million tons of rice in the husk
and imported 6.46 million tons. Despite the
negative performance in the 2016/17 growing
season, there is a surplus of 2.84million tons,
volume that up to the beginning of the 2000
decadeendedupinpublicstocks.
Belloli understands that the past season
was atypical, but when prices fell to R$ 39 per
sack, at the peak of the harvest, the Brazil-
ian cereal became attractive paving the way
for exports. “As prices dropped, we became
competitive, the export structure was activat-
ed,webegantomakeupforahugeportionor
rice fromMercosur countries, we drained our
supply and thepressure over themarket and
thepricesreactedreachingR$50”,heexplains.
There lies the importance of keeping foreign
clients.
Ofthe63destinationsofBrazilianriceinthe2016/17growingseason,thecountriesthatstandoutareSenegal(brokenrice),Peru,Venezu-
ela, Nicaragua (white, parboiledand in thehusk), Gambia (broken) and theUnitedStates (white). Among the 16 countries that supply rice to
Brazil,Paraguayistheleadingone(50%),followedbyUruguay(21%),andArgentina(20%),allexportersofwhitericeandriceinthehusk;Gui-
ana(inthehusk)andItaly(Arborium),amongothercountriesthatsupplyaromatic,colored,shortgrainandwildrice,etc.
n
n
n
Clients x suppliers
38
