Wednesday, 12 March 2014

Myanmar Rice Exports to China Decline Sharply Due to Falling Prices, Currency Fluctuations

Myanmar rice exporters have reduced rice exports to China by around 29% over the past one month due to falling prices and the appreciating kyat against both the U.S. dollar and the Chinese yuan, according to local sources.

China accounts to about 60% of unprocessed Myanmar rice exports. Myanmar usually exports about 3,500 tons daily to China, but is now exporting only 2,500 tons. Both the U.S. dollar and the Chinese yuan have declined against the Myanmar kyat since February 2014. According to sources, the USD depreciated by about 1.5% from K981 in February to K962 on March 10, 2014. Similarly, the yuan depreciated by about 2.5% from K161 in February to K157 on March 10, 2014.

Myanmar rice exporters claim that they are receiving 15-21% less revenue on export deals to China. Export prices of 25% broken rice have declined to $320 - $330 per ton from $404 a month ago, while export prices of 5% broken rice have dropped to $405-$415 per ton from $446. Exporters are also concerned that export prices may further decline as harvest of the second crop begins in many countries now, and also due to release of rice from government stockpile in Thailand.

Myanmar rice exporters say that exports are hurt due to high transactional toll and unstable prices offered by the Chinese importers as well. Local sources say that Myanmar rice exporters have reduced rice exports to China and are looking for other profitable destinations. The Myanmar Rice Federation (MRF) has reportedly finalized a deal with African countries Ivory Coast and Togo to export 100,000 tons of rice this month.

While the Myanmar government has set an export target of 3 million tons for the 2013-14 fiscal year, rice exports during the fiscal year are likely to reach only 1.1 million tons, down 47% from 2.1 million tons exported in 2012-13 fiscal, according to the Minister of Commerce. However, the USDA estimates Myanmar's rice exports in 2013-14 to be stable at the last year's level of 750,000 tons. The country's milled rice production is estimated at 11 million tons against a consumption of 10.25 million tons in 2013-14.

The government is in the process of finalizing a comprehensive rice policy including trade restrictions, taxes, export allowances and insurance policies.
source: Oryza
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