Rice Market Update: Watch Out For Big Swings
Tuesday’s Supply/Demand Report was more positive than some in the market had expected. Saying that an improved export picture was developing with the return of Venezuela to US rough rice market, long grain projected export figures were raised by 1 million cwts. At the same time, however, estimated domestic usage was lowered by a like amount, and imports were boosted by 500,000 cwts. All of this resulted in a 500,000 cwt increase in the predicted ending stocks of long grain to 24.1 million cwts for the 2011 crop.
Some in the trade had looked for a bigger increase in the carry over by USDA. The trade itself is not expecting a bigger carryover, and out of what will be left from the 2011 crop, some believe that a large percentage will still be poor quality lingering from the 2010 crop. The only other notable long grain change was made to the average farm price which was lowered on the low end by 10 cents and on the high end by 30 cents to $13.10 to $13.50 per cwt. The medium/short grain figures fared better, with exports raised by 2 million cwts which dropped the ending stocks by the same amount down to 12.2 million cwts.
Average farm prices were narrowed by 10 cents on each end to put medium/short at $15.50 to $15.90 per cwt. Although not all agreed with the figures, most agreed that USDA seemed to pay closer attention to rice this time around. Now, if they would just help get more exports moving, particularly to Iraq and Cuba, the entire industry would be in much better shape.
World Market Price factors were left alone by USDA this week. The long grain on-farm value calculation remains at $11.01 per cwt.
Rice futures had a very good week, settling at 15.31 in the nearby May which was 44.5 cents over the previous week’s close. Tuesday’s Supply/Demand Report inspired a fairly good intraday drop which saw a nice recovery by the day’s end. The market then caught fire on Thursday and traded up the 50 cent limit for a short time to settle up 43 cents on the day.
With some technical selling on Friday, the market backed off 5.5 cents to still finish the week at the best continuation chart close since early November of last year – all on good volume. If the technicals continue to dominate the short term market, we might see another 20 to 40 cent retracement over the next few days at which point buying should come into the pit again and start moving prices back up.
Watch out for big swings – be mentally and financially prepared for any futures trading, especially rice futures. In other markets near their respective closes, the Dow was off for the week at 12849.59; the Euro was at 1.3082 against the Dollar; and nearby crude futures were at 102.86 per bbl. Grains and cotton finished the week with July corn settling at 6.20-3/4, July beans at 14.40-3/4, July wheat at 6.30-1/4, and July cotton at 89.73.
It was a super week for export sales, with 92,100 tons posted with USDA. The news was especially good on the long grain front as 51,800 tons of rough were sold to Costa Rica, Mexico, and El Salvador – very good to see long grain paddy moving in quantities like these. Long grain milled was not to be left out of the picture and posted an excellent 31,600 tons of total sales. The big buyer was Haiti at 20,900 tons, followed by Canada at 5,100 tons, Mexico at 2,500 tons, Saudi Arabia at 1,200 tons (parboiled), and Costa Rica at 1,200 tons. The long grain report finished with a small brown tonnage sold to Canada. Medium/short grain posted 7,100 tons of rough for an “unknown” destination (would guess Turkey on this) and 1,500 tons of milled mostly to Canada and Turkey.
Exports for the week were big as well with at total of 87,900 tons shipping out, of which 43,400 tons were destined for Venezuela (28,900 tons), Mexico, El Salvador, and Guatemala. Long grain milled and brown moved 20,700 tons to Saudi Arabia (parboiled), Haiti, Canada, and Mexico. Medium/short grain rough loaded out 13,200 tons, mostly for Turkey with a small amount also for Mexico. Milled and brown medium moved a total of 10,500 tons for Jordan, Canada, and Taiwan.
Texas is reporting planting to finally be well underway, with some seeing the end in sight. This weekend’s predicted rain, however, will slow the final effort on the west and south sides. The east side still has a good bit to do, advising that the rains really had a big delaying effect over there. Old crop bids are still at the $7.50 per cwt premium over loan for conventional varieties and $6.75 over for hybrids, with very little if any moving right now. Some rice has been booked on the green contract put out by ARI.
South Louisiana reports planting to be finished in some areas with the next couple of weeks seeing all of it completed. Folks are looking for an early and good quality crop. Old crop buying interest is reported to be better now with bids of $21.00 per bbl fob farm being broadly noted, as well as interest in delivered barge at a slightly lower price. Some have expressed the feeling that most of the remaining good quality is fairly well picked over by this time.
The Delta/Arkansas region is seeing a pickup in action, too. It seems that those who have held for more reasonable (higher) prices are finally seeing better numbers come their way. Delivered (we are not sure whether this is delivered mill, barge, or both) bids in the $13.50 to $13.70 per cwt range are being indicated, and we are hearing of some small trading at or near those levels.
Planting in Mississippi is moving very rapidly, with more than 80% estimated done by this time. There was some feeling that acres were even further reduced in the last week or so due to the very high cost of fertilizer and that both corn and rice acres were instead replaced by soybeans. Some of the same was noted in Arkansas where there was also some talk of additional rice acres being planted in reaction to the big acreage cut predicted by USDA at the end of April. That’s a bit of a surprise with the price of soybeans being so strong and will ultimately lower the price of rice if it turns out to be correct.
With the exception of India, Asian prices were actually stronger across the board this week. Thai 100% Grade B long grain milled was better by $5 to $555 per ton fob vessel, and Thai parboiled moved back up to $600 per ton. Viet 5% was up by $10 to $440 per ton – there was some talk that the Chinese might buy a big slug of Viet rice. Pakistani 5% long grain milled held at the $465 per ton level, but Pakistani parboiled took a nice $15 jump to $475 per ton fob vessel. Prices for Indian 5% held at $445 per ton and parboiled remained at $425 per ton. For the most part, Asian prices have held fairly firm for the last several weeks.
The ICE Dec and Mar contracts gave back 160 and 87 points on the week, respectively, as last week’s inversion between the two contracts gave way to partial carry. Well,