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08 May 2024 | 15:29 UTC
By Peter Murphy
Highlights
Extent of flood damage to Brazil rice uncertain
Exporters without offers but expect prices to rise
Flood waters have reached rice in some silos: sources
Brazil's rice export market has ground to a halt in the midst of devastating floods that have claimed dozens of lives and pummelled infrastructure in Rio Grande do Sul.
Rio Grande do Sul is by far Brazil's biggest rice-growing state and a major grower of soybeans and other crops, amplifying the impact of the disaster on agricultural commodities.
"It's awful here. It's like a war zone," one exporter said. "We're still cut off here...The south of Rio Grande do Sul is practically isolated."
Exporters contacted by S&P Global Commodity Insights said business was suspended as they complied with orders to stay at home or followed the news and weather forecasts.
One said May 8 could be a turning point in the flooding, with the potential for waters to start receding if it stayed dry enough for most of the day.
Despite the human impact of the floods, exporters have refrained from writing off the prospects of the 10-15% of the rice crop that remained to be harvested when the floods hit.
A portion of the rice was planted in areas that were spared the impact of the floodwaters, while the remainder that took a direct hit might now have been washed away, exporters said.
"There is a significant impact on the quality of the rice...and we are not sure how much we lost yet," one exporter said.
Another exporter said they sought to assure customers that there were plentiful stocks to serve their needs and advised "caution" about speculating on losses. They said the center of the state, important for rice, was impacted by rivers which burst their banks.
There was also damage reported to rice stored in silos, although this appeared to have been an isolated incident. Nonetheless, one source said this rice could not be washed and recovered for sale.
The floods have come as a final knock-out blow to a 2023-24 campaign that has been marred by bad weather right from planting and early crop development. Harvesting has taken much longer than usual amid damp conditions, all of which have likely been accentuated by an El Nino weather pattern.
Brazil and its South American peers, Uruguay, Argentina and Paraguay compete with the US to supply Mexico and Central America. The US however will be unable to fill any void after strong demand and high prices in recent months rapidly dissolved its stocks which are now heard to be thin.
While Brazil exports similar volumes to its Latin American rivals but most of its rice is grown for a domestic market of more than 200 million people.
Exporters in Brazil and two observing from Uruguay and Argentina said they expected Brazilian offers to rise once export trade resumes. That would be by the end of next week at the earliest, one exporter said, with access to drinking water and empty supermarkets and gas stations the immediate concern.
Exporters need to look increasingly further back to recall a "normal" year in South American rice, with the market last year undersupplied and higher in price partly due to a severe drought in Argentina.
Meanwhile, Rio Grande do Sul's rice industry, like most others, now faces an agonizing wait to see what lies ahead.
"We're just waiting for the water to go down to see the damage," one exporter source said.
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