# Rice: Trading

The world's first futures market, and why it faded

Source page: https://www.materialinsights.org/commodities/rice/trading/

The world's first futures market, and why it faded What this tab covers How and where it is bought and sold: who buys and sells, exchanges and benchmarks, contract types, the big trading houses and how prices are discovered.

Rice brokers in Japan traded futures from as early as 1697, in what is believed to be the world's first futures exchange (Blas & Farchy, pdf p. 100). Today futures matter little. CME's rough rice contract covers US long-grain, and Chinese contracts are thinly traded. Most trade is physical, quoted free-on-board by origin and grade, such as Thai 5% or Vietnamese 5%. Morgan called the Bangkok posted price only a rough guide (pdf p. 401). The big grain houses never dominated rice because millers control the pipeline (pdf p. 402). Government-to-government deals and import tenders by Indonesia and the Philippines are common.

#### Where it is bought (buyers)

- State buyers: Indonesia's Bulog, Malaysia's Bernas, Bangladesh government tenders
- Private importers in the Philippines (since the 2019 Rice Tariffication Law), West Africa (Nigeria, Côte d'Ivoire, Senegal) and the Gulf
- Saudi and Gulf importers buy basmati from India and Pakistan
- In India, the FCI and state agencies buy paddy at MSP; private millers buy at mandis

#### Where it is sold (sellers)

- India (non-basmati from Andhra Pradesh, Chhattisgarh, Punjab; basmati from Punjab and Haryana) via Kakinada, Kandla and Mundra
- Thailand (Bangkok, Laem Chabang)
- Vietnam (Mekong delta, Ho Chi Minh City ports)
- Pakistan (Karachi)
- US (Arkansas, California) and Myanmar, Cambodia

#### Exchanges and benchmarks

| Venue | Contract | Notes |
|---|---|---|
| **CME Group CBOT** | Rough rice, 2,000 hundredweight (about 91 t) | US long-grain; thin outside the US |
| **Zhengzhou Commodity Exchange** | Early indica, japonica and late indica rice | thinly traded |
| **NCDEX (India)** | Paddy (non-basmati) futures | suspended by SEBI from December 2021 (suspension repeatedly extended) |

#### Contract types

- FOB cargoes in 25-50 kg bags or bulk, priced by grade (e.g. 5% broken)
- Government-to-government deals (e.g. India and Indonesia, Vietnam and the Philippines)
- Import tenders by Bangladesh and Indonesia
- Container trade for basmati and fragrant rice

#### Top trading houses

- Olam Agri
- Louis Dreyfus
- Ebro Foods (buyer and miller)
- Indian exporters such as KRBL and LT Foods
- Thai and Vietnamese exporters (Asia Golden Rice, CP Intertrade, Vinafood)

#### How prices are discovered

- Thai Rice Exporters Association weekly quotes
- Price agencies and trade surveys (S&P Global, Argus, Oryza)
- World Bank Pink Sheet monthly Thai and Vietnamese series
- Indian minimum export price notices, when in force

## Other sections

- [Summary](https://www.materialinsights.org/commodities/rice/index.md)
- [Overview](https://www.materialinsights.org/commodities/rice/overview/index.md)
- [Correlation](https://www.materialinsights.org/commodities/rice/correlation/index.md)
- [Extraction](https://www.materialinsights.org/commodities/rice/extraction/index.md)
- [Production](https://www.materialinsights.org/commodities/rice/production/index.md)
- [Stocks](https://www.materialinsights.org/commodities/rice/stocks/index.md)
- [Cycles](https://www.materialinsights.org/commodities/rice/cycles/index.md)
- [Movement](https://www.materialinsights.org/commodities/rice/movement/index.md)
- [Criticality](https://www.materialinsights.org/commodities/rice/criticality/index.md)
- [Characteristics](https://www.materialinsights.org/commodities/rice/characteristics/index.md)
- [Emissions](https://www.materialinsights.org/commodities/rice/emissions/index.md)
- [Relationships](https://www.materialinsights.org/commodities/rice/links/index.md)