22nd january,2015 daily exclusive oryza e newsletter by riceplus magazine

January 22, 2015 Volume 5, Issue I

Daily Exclusive ORYZA

Rice

www.ricepluss.com E-Newsletter

Chief Editor:Hamlik For Advertisement & Specs:

Mujahid Ali mujahid.riceplus@gmail.com

Cell: +92 321 36 92874

Compiled & Edited by

Riceplus Magazine www.ricepluss.com

Thai Rice Losses Estimated to Cross $21 Billion Jan 22, 2015

Losses from rice subsidy/pledging schemes between 2004 and 2014 are estimated to cross the earlier estimations of around $682 billion baht (around $21 billion) if depreciation and missing rice stocks are also considered, local sources quoted the Finance Permanent Secretary as saying.The Finance Secretary noted that Subcommittee overseeing accounting affairs of all subsidy schemes had not taken into account depreciation of rice stocks as well as missing stocks from warehouses while estimating losses from 11 subsidy schemes covering 15 harvests from 2004-14. Earlier, the Thai Finance Ministry had estimated that losses from the rice pledging scheme introduced by the previous government alone account to about 518 billion baht (around $15.8 billion).

The Finance Ministry had issued long-term bonds with three to ten years maturity in the beginning of this year to clear the debts associated with the rice pledging schemes.According to Page 1 of 11

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www.ricepluss.com the rice stock audit report, of the 17.8 million tons of rice with the government, only about 2.35 million tons are of standard quality, about 14.4 million tons are of sub-standard quality, around 694,000 tons of rice are rotten and the remaining 390,000 tons of rice are missing.

The government is keen on selling the 17 million tons of rice stocks within the next two years. It already sold around 681,740 tons of rice in four tenders last year after the military government took over on May 22, 2014. The Commerce Ministry is planning to sell around one million tons of rice in a tender on January 29, 2015.Thailand exported around 10.8 million tons of rice in 2014, up about 64% from around 6.6 million tons in 2013.

Thailand Government to Allow Bidders to Inspect Rice Stocks Before Auctions Jan 21, 2015

The Thailand government will reportedly allow prospective bidders to inspect samples of rice stocks being put up for sale before the scheduled auction on January 29, 2015, according to Wall Street Journal reports.The government is planning to auction around 850,000 tons of 5% broken rice and around 150,000 tons of jasmine rice on January 29. The Ministry is said to have loosened its norms to ensure more transparency in rice sales. Bidders are said to have been complaining of not being able to inspect rice stocks before auctions. It is also understood to have agreed to extend time for contract signing by winning bidders to two weeks from the existing 10 days.

The Thai government currently holds around 17.8 million tons of rice in its stockpiles. The Commerce Ministry stated its plans to sell around 10 million tons of stockpiled rice in 2015 and around 7 million tons in 2016 through tenders. Thailand sold around 681,740 tons of rice in four tenders last year after the military government took over on May 22, 2014. The government has also struck government-to-government deals for about 570,000 tons last year, according to Ministry sources.

Thai NACC and OAG Joint Panel Recommend Criminal Charges Against ExPremier in Rice Pledging Case Page 2 of 11

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www.ricepluss.com Jan 21, 2015

The joint panel comprising members of the National Anti-Corruption Commission (NACC) and the Office of the Attorney General (OAG) has agreed to recommend criminal charges against the former Prime Minister under the criminal Code's Section 157, according to local sources.The panel started investigation work into the rice pledging case on September 9, 2014 after Thailand's Attorney General has sought more evidences from the NACC before concluding the prosecution of the former PM. The panel completed discussions related to the former Prime Minister's (PM) alleged dereliction of duty in managing the controversial rice pledging scheme that brought losses of over 500 billion baht (around $15.6 billion) to the exchequer.

It is likely to recommend to the Attorney General to indict the former PM with the Supreme Court's Criminal Division for Holders of Political Position. If found guilty, the ex-Premier may face jail term up to ten years.

Separately, the Thai National Legislative Assembly (NLA) is dealing with the former PM's impeachment hearing and the NLA members will vote on January 23, 2015, whether she was guilty of dereliction of duty. The vote requires a three-fifths majority to pass a judgement.The NACC yesterday stated that it will charge former Commerce Minister, the former Deputy Commerce Minister as well as 20 state officials and employees of private firms for alleged corruption in rice export deals with two Chinese firms.Meanwhile, the Thai Commerce Minister told local sources that Thailand exported around 10.8 million tons of rice in 2014, up about 64% from around 6.6 million tons exported in 2013.

U.S. Treasury Announces New Trade Norms with Cuba Jan 21, 2015

The U.S. Treasury's Office of Foreign Assets Control (OFAC) has published the new trade norms with Cuba in the Federal Register following the President's announcement to relax trade restrictions on food items from the 50-year embargo with Cuba, according to a news release on its website.According to the new norms, the term "cash in advance" has been simplified and would mean "cash before transfer of title or control". This would allow , Cuban importers to make payment even while goods are in transit. The OFAC also Page 3 of 11

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www.ricepluss.com indicated that U.S. financial institutions would be allowed to open accounts at Cuban banks to facilitate easier and quicker transactions.

The regulatory changes were welcomed by rice industry as Cuba is one of the closest export destinations to the U.S. and imports about 50% of its annual rice consumption needs. Local sources say rice farmers in the U.S. rice producing states of Arkansas and Louisiana would benefit from the revised policy. "Up until now, U.S. government restrictions have limited the ability of the U.S. industry to compete in Cuba," the President and CEO of the USA Rice was quoted as saying.

USDA estimates Cuba to produce around 440,000 tons of milled rice and import around 450,000 tons of rice in MY 2014-15 (July - June) to meet a consumption demand of around 890,000 tons.

Cuba currently imports rice from Brazil, India and Thailand.

Vietnam Rice Sellers Lower Most of Their Quotes; Other Asia Rice Quotes Unchanged Jan 21, 2015

Vietnam rice sellers lowered most of their quotes by about $5 - $10 per ton today. Other Asia rice sellers kept their quotes mostly unchanged today.

5% Broken Rice Thailand 5% rice is quoted at around $405 - $415 per ton, about $40 per ton premium on Vietnam 5% rice shown at around $365 - $375 per ton, down about $10 per ton from yesterday.

India 5% rice is quoted at around $395 - $405 per ton, about $35 per ton premium on Pakistan 5% rice quoted at around $360 - $370 per ton.

25% Broken Rice Thailand 25% rice was last quoted at around $350 - $360 per ton, about $10 per ton premium on Vietnam 25% rice shown at around $340 - $350 per ton. India 25% rice is quoted at around $360 - $370, about $40 per ton premium on Pakistan 25% rice quoted at around $320 - $330 per ton.

Parboiled Rice

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www.ricepluss.com Thailand parboiled rice is quoted at around $405 - $415 per ton. India parboiled rice is quoted at around $390 - $400 per ton, about $10 per ton discount to Pakistan parboiled rice quoted at around $400 - $410 per ton.

100% Broken Rice Thailand broken rice, A1 Super, is quoted at around $320 - $330 per ton, about $5 per ton premium on Vietnam 100% broken rice shown at around $315 - $325 per ton, down about $5 per ton from yesterday. India's 100% broken rice is shown at around $300 - $310 per ton, about $10 per ton premium on Pakistan broken sortexed rice quoted at around $290 - $300 per ton.

Thai Ex-Premier Delivers Closing Statement in Rice Pledging Case Before NLA Jan 22, 2015

Thailand's former Prime Minister Yingluck Shinawatra attended the final impeachment hearing in the rice pledging case today at the National Legislative Assembly (NLA) and delivered her closing statement in defence of the rice pledging scheme introduced by her government, according to local sources.Today's hearing has been scheduled as she had not attended the second impeachment hearing on January 16, 2015. In her closing statement, former PM denied that the rice pledging scheme had caused national damage and defended the scheme saying it has rather benefited the national economy by raising farmers' incomes and their spending capacity. She also noted that the scheme had injected around 308 billion baht (around $9.4 billion) in the 2011-12 crop season and around 315 billion baht (around $9.7 billion) during the 2012-13 crop season and helped stimulate the economy.

The former PM claimed that the scheme had not consumed more than 5% of the annual national budget. She also questioned the NLA for prosecuting her alone when several minister and committees were involved in managing the scheme.

The National Anti-Corruption Commission (NACC) reiterated that the rice pledging scheme was purely a political tactic by the Yingluck's Party to win elections. The NACC Commissioner noted that the scheme led to policy-based corruption as the rice in the government's stockpiles was offered at lower prices to associates who made windfall gains by selling the same at high prices. He said the so-called government-to-government (G2G) deals claimed to be struck by the Yingluck government had not existed at all. He added that the former PM has not honoured the Page 5 of 11

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www.ricepluss.com suggestions of the NACC and the Office of the Attorney General (OAG) to stop the scheme as it would cause billions of losses to the state.

The NLA members will vote on Friday, January 23, 2014 deciding whether the former PM was guilty of dereliction of duty. The vote requires a three-fifths majority to pass a judgement. If impeached, the ex-PM would be the first female PM to be impeached and could face a political ban for five years.

Separately, the joint panel comprising members of the NACC and the OAG has agreed to recommend criminal charges against the former Prime Minister under the criminal Code's Section 157 for her alleged dereliction of duty in managing the controversial rice pledging scheme, which brought losses of over 500 billion baht (around $15.6 billion) to the exchequer.

GM Rice Can Protect Farmers from Hazards of Pesticide Exposure, Finds Study Jan 21, 2015

A study by Chinese researchers has found that growing of genetically modified (GM) rice can reduce pesticide usage to a larger extent and thereby protect farmers from adverse effects of being exposed to pesticides and fertilizers.The authors of the study found that GM rice can reduce pesticide use by nearly 66%. In number terms, pesticide use can be reduced by nearly 196,000 tons annually.

An analysis of data collected from the physical examination of nearly 109 rice farmers in the Fujian province showed that GM rice can significantly reduce adverse effects of pesticides on farmers' neurological, haematological, and electrolyte system. However, the results showed that 8% of sample farmers still suffered from pesticide-related poisoning. The authors have estimated nearly 16 million rice farmers suffer from pesticide-related illness every year.The study concludes that commercialization of GM rice can improve the health of farmers in developing countries, where pesticides and fertilizers are used heftily to increase yields and mitigate crop losses.

The study was conducted by the Center for Chinese Agricultural Policy; Institute of Geographical Sciences and Natural Resource Research; Chinese Academy of Sciences; School of Management and Economics, Beijing Institute of Technology; China Economics and Management Academy; Central University of Finance and Economics; and Department of Neurology, Chinese PLA General Hospital.

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Vietnam Scales Down Rice Export Expectations for First Quarter of 2015 Jan 21, 2015

The Vietnam Food Association (VFA) has scaled down expectations on the country's rice exports in the first three months of 2015 to around 900,000 tons, according to local sources. The expected export figure is lowest level for the first quarter of the year since past several years, said local sources. Vietnam exported around 800,000 tons of rice in the first quarter of 2014 and around 1.45 million tons of rice during the same period in 2013.

The VFA lowered its expectations for first quarter exports based on increasing supplies from Thailand and India as well as declining export demand from African countries. The VFA expects Vietnam to export over 7 million tons of rice (including official and unofficial exports to China) in 2015. In 2014, Vietnam exported around 6.32 million tons of rice through official channels and around 2 million tons of rice through unofficial channels, according to the VFA. This year, unofficial rice exports are expected to come down due to strict controls being imposed by Chinese authorities on the borders.

The VFA Chairman told local sources that Vietnamese rice exporters have already signed contracts for exporting around 500,000 tons and have to find markets for the around 400,000 tons to meet the expected export level in the first quarter of the year.Experts have been warning that the Vietnamese rice sector is plagued by financial difficulties, poor cultivation planning and outdated technology. They have been urging the government to increase production of higher quality rice and focus on attracting high-end markets in order to increase competitiveness of the Vietnamese rice as well raise farmers and exporters' incomes.

VFA's Secretary General told local sources that exporters have been improving coordination with farmers as well as enhancing the quality and value of rice. He also noted that the government is stepping up efforts to create a national brand for the country's rice to enhance export competitiveness of Vietnamese rice.Currently, export price of Vietnam 5% rice stands at around $370 per ton while that of India 5%, Pakistan 5% and Thai 5% rice stand at around $400 per ton, $365 per ton and $410 per ton respectively.

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Global Rice Quotes January 21st, 2015 Long grain white rice - high quality Thailand 100% B grade 415-425 Vietnam 5% broken 365-375 India 5% broken 395-405 Pakistan 5% broken 360-370 Cambodia 5% broken 440-450 U.S. 4% broken 510-520 Uruguay 5% broken NQ ↔ Argentina 5% broken NQ ↔ Long grain white rice - low quality Thailand 25% broken NQ ↔ Vietnam 25% broken 340-350 Pakistan 25% broken 320-330 Cambodia 25% broken 430-440 India 25% broken 360-370 U.S. 15% broken 495-505

↔ ↓ ↔ ↔ ↔ ↔

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Long grain parboiled rice Thailand parboiled 100% stxd 405-415 ↔ Pakistan parboiled 5% broken stxd 400-410 India parboiled 5% broken stxd 390-400 ↔ U.S. parboiled 4% broken 580-590 ↔ Brazil parboiled 5% broken 570-580 ↔ Uruguay parboiled 5% broken NQ ↔ Long grain fragrant rice Thailand Hommali 92% 920-930 Vietnam Jasmine 500-510 ↓ India basmati 2% broken NQ ↔ Pakistan basmati 2% broken NQ ↔ Cambodia Phka Mails 805-815 ↔ Brokens Thailand A1 Super 320-330 ↔ Vietnam 100% broken 315-325 ↓ Pakistan 100% broken stxd 290-300 Cambodia A1 Super 355-365 ↔ India 100% broken stxd 300-310 Egypt medium grain brokens NQ ↔ U.S. pet food 405-415 ↔ Brazil half grain NQ ↔

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All prices USD per ton, FOB vessel, oryza.com Page 8 of 11

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Oryza Afternoon Recap - Chicago Rough Rice Futures Find Late Session Buying Interest and Shoot to Double Digit Gains Jan 21, 2015

Chicago rough rice futures for Mar delivery settled 10.5 cents per cwt (about $2 per ton) higher at $11.370 per cwt (about $251 per ton). Rough rice futures found afternoon buying interest to close with double digit gains on support from a softer dollar and firming crude prices today. The other grains finished with mixed results today; Soybeans closed about 0.1% higher at $9.8350 per bushel; wheat finished about 0.1% lower at $5.3775 per bushel, and corn finished the day about 0.6% lower at $3.8800 per bushel.

U.S. stocks were little changed Wednesday, with International Business Machines weighing on the Dow Jones Industrial Average, as investors considered whether the European Central Bank would implement a large-scale bond-purchasing program. Multiple news outlets quoted sources in reporting the ECB's executive board had proposed monthly bond purchases of roughly 50 billion euros in a quantitative easing program that would last at least a year. Ahead of Wednesday's open, stock futures maintained losses after data showing U.S. housing starts climbed more than expected in December in a hopeful sign for the sluggish housing-market recovery. After sliding 119 points, the Dow Jones Industrial Average rose as much as 84 points, and was lately up 33.33 points, or 0.2%, at 17,551.56.

Erasing early losses, the S&P 500 rose 8.45 points, or 0.4%, to 2,031.00, with energy the best performing and all 10 of its major industry groups rising. The Nasdaq added 19.53 points, or 0.4%, to 4,674.37. Gold is trading about 0.1% lower, crude oil is seen trading about 1.9% higher, and the U.S. dollar is seen trading about 0.1% lower at about 1:00pm Chicago time.Tuesday, there were 312 contracts traded, up from 138 contracts traded on Thursday. Open interest – the number of contracts outstanding – on Tuesday increased by 131 contracts to 8,707.

Iraq Issues a Tender to Buy at Least 30,000 Tons of Rice Dec 14, 2014

The Iraq Trade Ministry issued a tender to buy a minimum of 30,000 tons of rice from the U.S., Uruguay, Argentina, Vietnam, Brazil and Thailand, local sources said.The closing date for the tender is December Page 9 of 11

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www.ricepluss.com 22, 2014 and offers must be valid until December 26, 2014. The ministry added that Thai white rice will be accepted in this tender

Nepal Considers Rice Exports to China Despite Likely Lower Production in 2014-15 Jan 21, 2015

Nepal is planning to allow rice exports to China in the fiscal year 2014-15 (August - July) considering huge demand for Nepali rice in China, sources from the Ministry of Commerce and Supplies (MoCS) were quoted as saying. Sources said Chinese importers pay ransom amount for Nepali rice. The Nepal government banned rice exports in 2013 citing food deficit as the main reason. According to Nepal Rastra Bank's (NRB) statistics, Nepal's 2013-14 paddy output was at around 5.04 million tons, up about 12% from around 4.5 million tons in 2012-13 due to timely rains and favorable weather conditions. Yet, it did not open rice exports in 2013-14.

However, the government is planning to reconsider ban and open exports this year despite a likely reduction in paddy production. The Ministry of Agricultural Development (MAD) estimates the country's 2014-15 paddy rice production likely to decline about 5.1% to around 4.78 million tons due to a late monsoon and untimely rainfall. The government is planning to export 10,000 tons of rice to China, according to the MoCS sources. They noted that the government would allow exports to China through the two routes - Tatopani and Rasuwagadhi.

Exporters can supply 5,000 tons of rice through each of the two routes.

The NRB statistics show that the south Asian nation imported rice worth Rs.12.37 billion (around $121.45 million) in 2013-14, up about 46% from around Rs.8.47 billion (around $83.16 million) despite surplus rice stocks of around 800,000 tons from the previous fiscal due to rising disposable incomes and the Nepalese preference for better quality rice. The government imported rice worth Rs.5.51 billion (around $56 million) in the first five months of the fiscal 2014-15.

USDA estimates Nepal’s MY 2014-15 (October 2014 – September 2015) milled rice production to slightly decline to about 3.1 million tons (around 4.65 million tons, basis paddy) from an estimated 3.36 million tons (around 5.05 million tons, basis paddy) in MY 2013-14. It estimates Nepal to import around 350,000 tons of rice in 2015.

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USDA Post Estimates Mexico MY 2014-15 Rice Imports at 775,000 Tons, Up 11% from Last Year Jan 21, 2015

USDA Post estimates Mexico's rice imports at around 775,000 tons in MY 2014-15 (October 2014 - September 2015), up about 10.7% from an estimated 700,000 ton in MY 2013-14, and unchanged from USDA's official estimates of 775,000 tons, based on information from the Secretariat of Agriculture, Livestock, Rural Development, Fisheries and Foodstuffs (SAGARPA).

Last month, Mexico has announced reinstatement of 9% tariff on imported paddy rice and 20% tariff on husked, long grain and other imported rice from all the countries that do not have free trade agreements (FTAs). However, the U.S. is exempted from the tariff because of its inclusion in the North America Free Trade Agreement (NAFTA). The tariff rates have been effective from January 9, 2015.The Mexican government has announced the reinstatement of tariffs in a decree that was published in the Diario Official (Mexico's Federal Register) on December 10, 2014.

Last month, the Post reported that the government decided to modify the import Law based on requests from the Mexican Rice Council (MRC) for the re-establishment of import tariffs, which were discontinued in 2008 to reduce rice prices in the country.

The Post estimates total paddy rice production for MY 2014-15 at around 226,000 tons (around 155,000, basis milled), up about 18% from an estimated 191,000 tons (around 131,000, basis milled) in MY 2013-14 and up about 6% from USDA's official estimates of around 214,000 tons (around 147,000 tons, basis milled). The likely increase in production is attributed to favorable weather conditions and increase in yields.The Post estimates Mexico's MY 2014-15 milled rice ending stocks at around 195,000 tons, up about 23% from an estimated 158,000 tons in MY 2013-14 and up about 4% from USDA's official estimates of around 187,000 tons.

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