Confusion reigns as Iraq weighs buying rice from Thailand, US

The rice market is rife with speculation over talks that Iraq’s purchasing authority for basic foodstuffs, including rice, is returning for new purchases.

Al-Owais/Al-Awees was appointed by the Iraqi government about a year ago to take over the purchase of rice for the government’s subsidized food program. Whereas the government previously purchased rice through international and US-specific tenders, Iraqi purchases are now made exclusively through private negotiations with trading companies.

The United States has benefited from a long-standing Memorandum of Understanding between the two countries. This pushes Iraq to buy long-grain rice from the southern United States, despite the typical premium of American rice to other origins, especially in Asia.

Under the most recent version of the memorandum of understanding, Al-Owais has agreed in principle to buy 200,000 tons of US rice per year from July to June. Only 120,000 tonnes of the 2021-22 MoU have been fulfilled – hampered so far in 2022 by high prices and low stocks in the United States – but discussions are underway to have the remaining 80,000 tonnes fulfilled. filled late with rice from the new crop, which is expected to start along the US Gulf Coast in late July.

However, the details of the talks remain vague and even US insiders seem confused by the situation. One such source said he had received “mixed signals from Iraq”, saying the talks had resulted in “nothing concrete”. A second source said the talks went “quiet” on July 5 and hadn’t received an update since July 1.

There is even a debate around who approached whom. “If I understand correctly, they approached us,” the second source said. However, other industry sources were more dismissive of Iraqi interest. One individual called the talks just “US making noise about Iraq”, while a second said: “I wouldn’t be surprised if [the talks] were all led by the United States.

Even industry hopefuls in the United States – armed with the US-Iraq Memorandum of Understanding – are concerned about the price disparity between the United States and Iraq’s recently preferred rice trading partner, Thailand. The Platts valuation of US #2, 4% off-white rice, bagged FOB Lake Charles, is currently at a $276/ton premium to the Platts valuation of 100% Grade B Thai white rice, which are the rice products that Iraq generally purchases from these countries. countries. Thailand is also likely to enjoy a freight price advantage, in addition to a journey length advantage, to the Iraqi port of Umm Qasr.

Between January and May, Thai exporters shipped around 415,000 tons of rice to Iraq via LDC and ADM, with at least another 150,000 tons expected to be shipped in the coming weeks – on top of what was shipped in June. Since June, however, new orders from Iraq have dried up for Thailand, which an exporter in the country said was an opportunity for the United States to strike a deal with Iraq. However, with no signs that Iraq and the US South are close to a deal, it looks like Iraq could return to Thailand.

“Yes, Iraq is back,” a prominent trader said of the interest in Thai rice. The source added that the new sales will ship from August, but details remain sketchy. “God knows,” a major exporter said of details of new Iraqi buying interests.

However, it remains unclear whether Iraq’s surrender to Thailand will mean a new deal with the US South is dead. As with many aspects of the international rice trade and Iraq, the chief trader said, “You never know.”
Source: Platts

Leave a Comment