China’s stealthy shake-up of rice market

China’s stealthy shake-up of rice market
Updated 02 November 2012

China’s stealthy shake-up of rice market

China’s stealthy shake-up of rice market

CHICAGO: China’s growing influence in the grain and oilseed market has been well covered in recent years, with the country’s increasing share of global corn, soybeans and
(recently) wheat trade exhaustively scrutinized by market trackers.
But less well publicized has been China’s emerging dominance in the rice market, brought about by soaring domestic prices which sparked a wave of import buying lately that has catapulted China from seventh to second in the world rice import rankings and altered the trade flow across Asia of one of the world’s most popular dietary staples.
A massive population and trade surplus has provided the Chinese government with both the motivation and the means to delve into the world’s raw material markets to secure an array of commodity supplies in recent years. Indeed, global commodity trade over the past five to 10 years has largely been defined by the giant tonnages of metals, energy products and crops that flow across the planet to China.
But while China’s presence as a top importer of items such as soybeans and iron ore have become an established ‘fact of life’ over the past decade, the country still has the tendency to disrupt other key markets from time to time whenever its own reserves of that particular commodity fall short of its continually expanding requirements.
The corn market has been subject to such disruption over the last two years as China made rare forays onto the import stage to supplement domestic supplies — even though it is the world’s second largest producer of that crop.
But a more significant disruption may be under way in rice, which is roughly half the size of the corn market and is traditionally a commodity where China is considered to be wholly self sufficient given it is the world’s top producer by a significant margin and reportedly holds more than 40 percent of the world’s reserves.
But it is clear from China’s domestic price trends and commodity import flows so far in 2012 that the country’s rice supplies may not be as abundant as it might like, as of all the grains the country imports the trend in rice purchases has displayed the most significant deviation from the trend seen over the past several years.
The first indication that China’s rice supply situation may not be quite as abundant as official inventory estimates may suggest was when domestic rice prices established and then built on a premium over the rice export prices from nearly all key rice supplier nations.
The price of medium-short milled rice in China has frequently traded above exporter values in recent years, but early-harvest large grain rice has only developed a premium
since 2011, indicating that cost-sensitive Chinese consumers are running out of affordable options when it comes to dietary staples.
But the more dramatic indication that something unusual was afoot in the Chinese rice arena was the country’s aggressive buying spree on the export market since the beginning of the year, and the fact that such buying marked a stark deviation from China’s normal rice import buying patterns seen over the preceding six years.
And China’s importing actions were not just unusual for China itself. The hefty tonnages involved (more than 1.8 million metric tons as of the end of September, and forecast to top 2 million by year-end) served to reshape the global import stage, catapulting China from seventh in world rice import rankings in the 2010/11 crop year to second by the end of 2011/12. The country is projected to solidify its place as the number two rice importer behind Nigeria this year.
The fact that the world’s top rice grower, consumer and inventory holder has now also become the second largest importer of that crop should start to send warning signals to other large rice importers, especially those with little to no production capabilities of their own.
Indeed, China’s aggression on the world crop import market in general should give other potential grain buyers cause for concern, especially in light of China’s already-dominant positions in the corn, wheat and soy markets in recent years.
Time and again Chinese traders have shown an oftentimes intimidating mix of market savvy and aggression designed to replenish domestic inventories of key commodity staples and ensure that the country has the ability to tap into additional supplies in due course should domestic production totals miss the mark.
With China now established as a top-level consumer, importer and/or stock holder of all of the world’s main edible staples, its traders will be perceived to have a competitive advantage on the world crop buying stage due to the sheer tonnages they look to acquire and the frequency with which they do it. At the very least, few other importing nations will relish having to compete with China to secure their own access to food and feed crops
given China’s experience and sophisticated commodity acquisition network.
But this wide reach across the entire grain and oilseed spectrum also provides Chinese grain suppliers with enviable flexibility during periods when the price of one particular crop outpaces others for any particular reason.
Having access to all the major grains allows for the potential ability to substitute — in ‘China-scale’ quantities — one grain staple for another, and could actually set the stage
for a retraction in China’s import purchases of certain crops over time as the country’s grain supply merchants seek to balance and distribute a blend of crop inventories appropriately across the country.
But for the time being China appears to be in a buying mood, and just added close to record-sized amounts of rice to its grocery list.
— Gavin Maguire is a Reuters market analyst. The views expressed are his own.


Saudi Arabia sees record IPOs requests, 50% rise in managed assets, says CMA chief

Saudi Arabia sees record IPOs requests, 50% rise in managed assets, says CMA chief
Updated 03 August 2021

Saudi Arabia sees record IPOs requests, 50% rise in managed assets, says CMA chief

Saudi Arabia sees record IPOs requests, 50% rise in managed assets, says CMA chief
  • Elkuwaiz says assets under management by financial institutions have increased by 50 percent

RIYADH: Saudi Arabia is seeing a record interests from companies to sell shares to the public, while the size of the assets under management by financial institutions increased by 50 percent to SR600 billion over 3 years, the chairman of the country’s capital market authority said.

The increase in the volume of assets under management (AUM) had impact on the financial market and has contributed to opening new investments areas such as the launch of financial derivatives market, which made a debut last year, Mohammed Elkuwaiz said in panel hosted by the Financial Academy.

The authority received recently 30 requests to sell shares in initial public offerings and this is the highest number the authority, known as CMA, got since its establishment, he added. 

Mohammed Elkuwaiz, CMA chairman

Saudi Arabia is implementing a huge program to modernize and develop its financial sector under the country’s vision 2030 plan. Under this program the CMA had a target to list 20 new companies in 2021 on the Saudi index through public offerings, and the authority had achieved half of this target by the end of the first half of the year, Elkuawiz said.

Interests from companies to sell shares to the public increased over the past few years with the introduction of the parallel market, known as Nomu. Elkuwaiz explained that the main market, Tadawul, targets larger and more mature companies with the ability and willingness to bear big loads in terms of disclosure data, governance, while smaller companies prefer to list on Nomu.

“Listing on Nomu is an exciting window for the small and medium size and entrepreneurs in Saudi Arabia as we see the increase in IPOs interest and this is the result of the CMA strategy,” said Mohammed Ramady, an independent economic analyst and former senior banker told the Arab News in comments on Saudi financial development.

Another area where Saudi Arabia is venturing and advancing is Fintech. “We have more than 15 companies licensed as financial technology companies, which facilitates the availability of other types of financing that did not exist in the past, such as crowdfunding, which has become a boost for the financial market,” Elkuwaiz added.

The chairman of CMA also noted that foreign investments in the Saudi stock market have been positive and steady since they were allowed several years ago, with more than SR20 billion has entered Tadawul market since it was included in global indexes.

“The system of governance and disclosure in the financial market has been developed, making the Kingdom one of the world’s top 4 countries in terms of governance – something we are very proud of,” he added.


Fitch revises Egyptian bank’s outlook to stable

Fitch revises Egyptian bank’s outlook to stable
Updated 03 August 2021

Fitch revises Egyptian bank’s outlook to stable

Fitch revises Egyptian bank’s outlook to stable

RIYADH: Fitch Ratings has revised Commercial International Bank (Egypt) S.A.E.’s (CIB) outlook to stable from negative while affirming the bank’s long-term issuer default rating at “B+” and viability rating at “b+.” 

According to the ratings firm, pressures on the domestic environment have eased since the end of the third quarter of 2020 moderating downside risks to Egyptian banks’ credit profiles.

It said this reflects improving foreign currency liquidity, with the banking sector’s net foreign assets reaching $3.5 billion in April 2021, a reversal of a net foreign liability position of $5.3 billion at the end of April 2020. This was supported by a strong increase in foreign holdings of Egyptian treasuries to $29 billion in May 2021.

Fitch expects real GDP growth to accelerate to 6 percent in 2022.


Egypt’s domestic liquidity exceeds $213.9 billion

Egypt’s domestic liquidity exceeds $213.9 billion
Updated 02 August 2021

Egypt’s domestic liquidity exceeds $213.9 billion

Egypt’s domestic liquidity exceeds $213.9 billion

CAIRO: Egypt’s domestic liquidity rose to EGP 5.36 trillion ($213.9 billion) at the end of June 2021.

According to the official data, liquidity grew by 1.9 percent monthly. Domestic liquidity increased by 18.3 percent annually, compared to EGP 4.53 trillion in June 2020.

The money supply rose during June to EGP 1.25 trillion, compared to EGP 1.22 trillion in May 2021.  Money supply includes deposits in local currency and cash in circulation outside the banking system.

Last November, the Central Bank of Egypt decided to reduce both the overnight deposit and lending rate and its main operation rate by 50 basis points, to 8.25 percent, 9.25 percent, and 8.75 percent, respectively.

Last month, the central bank froze the interest rate for the fourth time this year.


Saudi Arabia reiterates its commitment to fight climate change

Saudi Energy Minister Abdulaziz Bin Salman. (REUTERS file photo)
Saudi Energy Minister Abdulaziz Bin Salman. (REUTERS file photo)
Updated 02 August 2021

Saudi Arabia reiterates its commitment to fight climate change

Saudi Energy Minister Abdulaziz Bin Salman. (REUTERS file photo)
  • Prince Abdul Aziz and Sharma discussed the framework of the circular carbon economy adopted by G20 leaders during Saudi Arabia’s presidency in 2020

RIYADH: Saudi Energy Minister Prince Abdul Aziz bin Salman recently held a meeting with COP26 President-designate Alok Sharma and discussed ways to enhance cooperation in confronting global climate change.
The Saudi minister highlighted the Kingdom’s qualitative initiatives to help reduce emissions and preserve the environment, foremost of which are the Saudi Green and Middle East Green initiatives.
Saudi Crown Prince Mohammed bin Salman launched these initiatives on March 27. These initiatives are aimed at reducing carbon emissions in the region by 60 percent through the use of clean hydrocarbon technologies and the planting of 50 billion trees, including 10 billion in Saudi Arabia.
The “green” initiatives, which are part of the Vision 2030 strategy, will place Saudi Arabia at the center of regional efforts to meet international targets on climate change mitigation, as well as help it achieve its own goals.
Prince Abdul Aziz and Sharma also discussed the framework of the circular carbon economy adopted by G20 leaders during Saudi Arabia’s presidency in 2020.
While the Gulf Cooperation Council (GCC) region has long been a leading global supplier of fossil fuels, renewables are complementing its own energy mix, offering eco-friendly alternatives such as clean hydrogen fuel to decarbonize and reduce gas emissions.
With around 70 to 90 percent of the Arabian Peninsula facing the threat of desertification, owing to past and ongoing human activities, massive afforestation, and land restoration initiatives hold hope for millions of hectares of degraded land.
Unfortunately, in a G20 meeting held in Italian city, Naples on July 22-23, energy and environment ministers failed to agree on the wording of key climate change commitments in their final communique after China and India refused to give way on two key points.
One of these was phasing out coal power, which most countries wanted to achieve by 2025 but some said would be impossible for them.
The other concerned the wording surrounding a 1.5-2 degree Celsius limit on global temperature increases that was set by the 2015 Paris Agreement.
Average global temperatures have already risen by more than 1 degree compared to the pre-industrial baseline used by scientists and are on track to exceed the 1.5-2 degree ceiling.
“Some countries wanted to go faster than what was agreed in Paris and to aim to cap temperatures at 1.5 degrees within a decade, but others, with more carbon-based economies, said let’s just stick to what was agreed in Paris,” said Italy’s Ecological Transition Minister Roberto Cingolani.
The G20 meeting was seen as a decisive step ahead of United Nations climate talks, known as COP26, which take place in 100 days’ time in Glasgow in November.


Saudis seek European partners to expand space program

Saudi Minister of Communications and Information Technology Abdullah Al-Swaha met the French Ambassador for Digital Affairs Henri Verdier. (SPA)
Saudi Minister of Communications and Information Technology Abdullah Al-Swaha met the French Ambassador for Digital Affairs Henri Verdier. (SPA)
Updated 03 August 2021

Saudis seek European partners to expand space program

Saudi Minister of Communications and Information Technology Abdullah Al-Swaha met the French Ambassador for Digital Affairs Henri Verdier. (SPA)
  • Al-Swaha met COO of French National Center for Space Studies to discuss potential for partnerships in the research and scientific fields

RIYADH: Saudi officials in charge of developing the country’s space program are now traveling around Europe seeking partnerships with leading companies in a sign that the Kingdom is putting the program up on its agenda.
The chairman of the board of directors of the Saudi Space Commission, Abdullah Alswaha, met in Paris on Monday with the head of Space Systems at Airbus, Jean-Marc Nasr, CEO of the Communications and Systems Group Eric Blanc, and the chairman of the board of directors of the Himmeria Group, Philippe Gautier, the Saudi Press Agency reported.
This came as part of Alswaha’s visit to the French Republic to enhance cooperation between the two countries in the field of space, it added.
The Saudi delegation also visited Britain on Friday, to enhance potential cooperation in innovation and space economy between the two countries, and build partnerships in the telecommunications sectors. Around 80 British companies in relevant fields attended the meeting with the Saudi delegation in London, SPA reported.
The Saudi delegation to London also reviewed available investment opportunities, the competitive advantages that the Kingdom enjoys as a digital and logistical platform and a hub for connecting continents, and the possibilities in the field of research, development, innovation and the space economy.