Thai rice shipment headed to Brazil as domestic prices turn uncompetitive

At least one 30,000 mt shipment of Thai white rice is headed to Brazil, a highly unusual trade rooted in a loss of competitiveness of Brazilian domestic supply after months of near-unbroken price rises.

The shipment, confirmed by the international trader behind it, is 100% Grade B quality, one of the more expensive types available from Thailand and will depart on its 32-day journey on Nov. 23 to Brazil's maritime port of Rio Grande do Sul, in the south of the country.

At least two other traders confirmed to S&P Global Commodity Insights that they were scouring the Brazilian market for further demand for Thai rice, with a view to additional imports.

"The window (of opportunity) will be really short because we are already mid-November. In two months, there should be some crops starting to become available in Paraguay or parts of Brazil, and from Thailand there is 50 days transit," said one international trader looking into conducting Thai-to-Brazil business.

"We're continually calculating what would be the best option for our Central and South American buyers and at the moment that includes a little bit of Asian rice."

There is some risk involved in such a tight timeframe for traders given the preparatory work of obtaining and providing samples to Brazilian buyers who may ultimately opt to hold out for the next domestic crop. There may be opportunities to export to Central America over a more relaxed timeframe, however, the source said.

While details are so far few, an exporter in Argentina who frequently exports rice to Chile said the latter has bought or been looking to buy rice from an unspecified Asian origin, while another said Peru has previously bought rice from Thailand as it is one of the few origins that offers the right characteristics.

Brazil, by far South America's biggest producer, is still sowing its 2024 harvest, but its first supplies are likely to come from Paraguay, the bulk of whose produce Brazil buys as a top-up to its own. Paraguay is expected to have some supply by late January, sources say, with Brazilian, Uruguayan and Argentinian crops to ripen weeks later.

While the US is currently harvesting rice and would seem the most logical source to ease tight supplies, its cooking and texture characteristics are less favored by South American palettes. US grains logistics have also been jammed for weeks because low water levels have restricted traffic on the Mississippi River. These are only now starting to ease following rains, enabling exports to flow more normally.

A Brazilian exporter confirmed knowledge of the forthcoming shipment. He said that a number of Brazilian mills were forming a "purchasing pool" of off-takers for the inbound Thai rice.

Brazil's loss of competitiveness has arisen from tighter supply availability this year, in part the knock-on effect of a severely shrunken harvest in Argentina following drought and the accumulation of other more minor factors such as a rice deficit in normally self-sufficient Ecuador.

The aforementioned international trader looking to conduct Thai-to-Brazil imports, but not yet executing them, said the biggest opportunities were likely to lie in northern Brazil, several thousand kilometers from the country's rice hub in and around the southern state of Rio Grande do Sul. Thai rice is on a more even keel with Brazilian supply when it comes to logistical costs to deliver there, given its relative remoteness to both origins.

"It's now cheaper officially to import rice in containers from Thailand than purchase rice domestically in Brazil and move it up north," the trader said.