Confusion reigns as Iraq weighs buying rice from Russia, Thailand
Shafaq News/ The rice market is rife with speculation on talks that Iraq's buying authority for basic food products, including rice, is returning for further purchases.
Al-Owais/Al-Awees was appointed by the Iraqi government approximately a year ago to take over buying rice for the government's subsidized food scheme. While the government had previously procured rice through international and US-specific tenders, Iraqi purchases are now made exclusively through private negotiations with trading companies.
The US has benefitted from a long-standing memorandum of understanding between the two countries. This pushes Iraq to buy long grain rice from the US South, despite the typical premium of US rice to other origins, especially in Asia.
Under the most recent iteration of the MOU, Al-Owais in principle agreed to buy 200,000 mt of US rice annually, running July-June. Only 120,000 mt of the 2021-22 MOU was fulfilled -- hampered so far in 2022 by high prices and low stocks in the US -- but there are talks for the remaining 80,000 mt to be filled late with rice from the new crop harvest, which is due to get underway along the US Gulf Coast in late July.
However, details of the talks remain vague and even US insiders appear confused by the situation. One such source talked about receiving "mixed signals from the Iraq side," saying that talks had led to "nothing concrete." A second source said discussions had gone "quiet" July 5, and that it had not received an update since July 1.
There is even debate surrounding who approached who. "As I understand it, they approached us," the second source said. However, other industry sources were more dismissive of Iraqi interest. One individual labeled the talks as merely the "US making noise about Iraq," with a second saying that "I wouldn't be surprised if [the talks] were all US driven."
Even hopeful industry sources in the US -- armed with the US-Iraq MOU -- are concerned by the price disparity between the US and Iraq's recently preferred rice trading partner, Thailand. The Platts assessment of US #2, 4% broken white rice, bagged FOB Lake Charles, is currently at a $276/mt premium to the Platts assessment of Thai 100% Grade B white rice, which are the rice products Iraq typically buys from these countries. Thailand is also likely to benefit from a freight price advantage, in addition to a journey length advantage, to Iraq's Umm Qasr Port.
(S&P)
