Rice Market Update: Positive Futures Week, Planting in Texas and Louisiana
USDA made no changes to the World Market Price factors this week; the on-farm WMP value of long grain rough holds at $12.28 per cwt.
- For the first week in some time now, rice futures had a positive close at 14.90 in the nearby May contract compared to last Friday’s settlement at 14.68. The market had been oversold for several days before the upturn finally came, and Friday’s buyers ran into expected technical resistance around 14.92 on the continuation chart. Now all are waiting to see if follow through to the upside will be seen next week.
- The Western Hemisphere fundamentals say that US rice futures values should continue to rise, but global stocks are being given credit for the bearish action of the last several weeks. We can appreciate both sides of this story, but the fact is that the CME rice is a US contract and pays little attention to Asia when it comes to usable supplies. That factor is even more pronounced for this year’s old crop still in first hands.
- The potential for a short squeeze on the May and July futures is real; to some degree, that’s what happening in the cash market now. Whether it happens in the rice futures, too, may be a different story – only time will tell over the next few months. It looks to us like more big swing action could be seen in the next several weeks. By physical rights, there should be a substantial rally in the offing, but this market has defied US cash fundamentals thus far. Use caution if trading this or any other futures contracts.
- The Dow closed at 14512.03; the Euro was at 1.2991 against the Dollar, and nearby crude futures were at 93.88 per bbl. Grains and cotton ended the week with May corn at 7.26-1/4, May beans at 14.40-1/2, May wheat at 7.29-3/4, and May cotton at 87.11.
- Weekly export sales postings were just slightly better than last week, but still very good at 63,500 tons.
- The gross sales figure for long grain rough moved some 33,000 tons previously in the unknown column over to Venezuela, which is what we suspected last week. It’s good to see that Venezuela is continuing to buy US rice even with the death of Chavez.
- Other long grain rough sales posted included 9,100 tons to Mexico, 7,000 tons to Honduras, and a small tonnage to El Salvador.
- Long grain milled and brown totaled 25,900 tons, with Haiti being the big buyer at 16,900 tons, along with 3,900 tons to Ghana, 1,600 tons to Saudi Arabia, 1,500 tons to Mexico, 700 tons to Jordan, and 700 tons of milled and brown to Canada.
- Medium/short rough posted gross tonnage of 21,200 tons; Turkey took 20,000 tons and Libya bought 1,200 tons.
- Medium/short milled posted 9,000 tons for the week, with Saudi Arabia and Israel taking 2,100 tons each, followed by 1,500 tons to Jordan, 1,100 tons to South Korea, and 800 tons to Canada.
- Export shipments were stout at 95,000 tons for the week. Long grain rough dominated the landscape with 48,500 tons going to Venezuela – 33,000 tons, Honduras – 7,000 tons, El Salvador – 4,100 tons, Mexico – 3,300 tons, and Guatemala – 1,000 tons.
- Long grain milled and brown reported liftings of 12,600 tons, including 7,400 tons to Ghana, 2,300 tons to Saudi Arabia, 1,600 tons to Mexico, and 900 tons (including brown) to Canada.
- A good chunk of medium/brown rough moved out as well with 21,900 tons going to Libya (21,200 tons) and Mexico (700 tons).
- Medium/short brown shipped 2,200 tons to Taiwan and South Korea, while medium/short milled moved a number of small shipments totaling 9,800 tons mostly to South Korea, Canada, Jordan, Turkey, and Taiwan.
- Texas continues to sit on the last 150,000 cwts of long grain rough until new crop comes in around mid august.
- There was a bid this week at $10.25 premium per cwt over loan, but that drew no fire from the seller.
- Planting is about a third complete, but growers are waiting and hoping for a little more moisture before putting anymore in the ground.
- The crop will be a short one for yet another year due to the water being cut off for next year – this affects about 65,000 acres of prime Texas rice land.
- South Louisiana continues to see $26.00 per bbl fob farm being bid, and we understand that some small parcels are trading at that level. What few larger parcels may be still in first hands, however, are looking for better prices.No one seems to have much of a handle on how much is really left in first hands, but no one believes it is really very much.
- The feeling is strong that rice in this state will run out around the end of April – at that time the mills will need something more to process. It’s a long time from April 30 to August 15.
- Planting is well underway, with some looking for a good bit of rice being cut at one time during harvest. There may be something of a break taken in planting to let some of the processing/drying be more orderly at harvest.
- We suspect that more hybrids will be planted this year, especially by those who also raise crawfish and do not second-crop their rice. We are told that CL 151 is being avoided due to the blast experience last year.
The Delta/Arkansas – Mississippi
- This region is seeing the same conditions as Texas and Louisiana are having – maybe not quite as bad just yet.
- On the one hand we hear that bids have dropped with the futures break to something in the area of $15.00 per cwt delivered loading facility, but then we hear that no one will sell for less than $15.55 per cwt fob farm.
- There are signs that buyers are definitely coming to the party as far as prices are concerned, and this says to us that long grain rice is running out or at the very least is extremely tight throughout the South.
- Planting of the new crop should start soon.
- There is still a lot of confusion as to just how much rice will be planted in Mississippi in the new crop, with some reporting that growers are saying corn is just as good at current rice levels and others saying the rice is better. The final acreage reports will be very interesting.
- Arkansas reports similar condition, with $6.00 per bu bids fob farm noted for old crop and $6.25 per bu delivered reported for new crop. Neither of these figures is very appealing to prospective sellers. Getting good figures out of Arkansas is difficult, but from what we are told, rough long grain there is disappearing at a fast pace.
- Prices in Asia ended the week mixed with Thai 100% Grade B quoted at $550, and Thai parboiled called $560, both per ton fob vessel.
- Viet 5% long grain was off another $5 this week at $395 per ton.
- Pakistani 5% milled long grain was called $430 per ton, while parboiled held at $460 per ton.
- Indian 5% milled and parboiled held firm at $430 and $435 per ton respectively.
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,