Rice Market: Late U.S. Planting Probably Means Low Yields
USDA – WASDE Supply/Demand Report
The Supply/Demand Report is the first one making projections about the 2013/14 crop. Except for lowering the top end of the Average Farm Price estimate from $14.80 to $14.60, there were no changes noted in the old crop figures from last month’s report.
As far as the new crop projections are concerned, however, we think the report is mistaken or full of forced figures in a number of areas. In looking at it ourselves and in visiting with other folks in the South, we think the acres, both planted and harvested, are too high and that average yield is projected too high. This is based on the weather that has been observed and known about for weeks now.
We continue to feel that the 2012/13 ending long grain stocks are too large by perhaps several million cwts, and this is almost certainly true when considering what may be “high quality, usable” ending stocks. If we are correct, then the new crop beginning stocks are too high. We also believe that domestic use will not be down as projected by USDA, nor are we convinced that imports will be substantially higher or that US long grain exports will be off as much as projected. If our situation estimate is correct, this could lower the 2013/14 long grain carry over by several million cwts, leaving stocks at the year’s end in very low double digits at the very least and maybe even in single digit territory. We do not understand the fixation in Washington of repeatedly overestimating or overstating long grain carry over figures.
MARKET THIS WEEK
WMP factors remained unchanged. The on-farm WMP value of long grain rough is still $12.13 per cwt.
Weekly export sales posted with USDA came in at a net of 38,300 tons. This appears to be low, but we should expect an up-and-down situation from week to week with so much rice already sold and the mills having difficulty getting completely covered at present. Long grain paddy this week show sales to Guatemala (9,000 tons), Mexico (2,000 tons), and El Salvador and Honduras with 2,800 tons between them. Long grain brown and milled totaled 14,300 tons, with Haiti, El Salvador, Mexico, Ghana, and Canada being the main buyers. Medium/short brown reported sales of 8,500 tons to South Korea added to by 100 tons to Taiwan. Medium/short milled noted 9,100 tons sold primarily to South Korea, Canada, and Israel.
Rice futures took a breather this week and sold off a bit in reaction to the short term oscillator being a little overdone on the upside. The nearby July finished 10.5 cents lower than last Friday’s settlement, and this may bring on a little more negative action next week. It’s getting into overdone technical territory to the downside, however, so it’s really anybody’s guess right now. The trading volume is so low that it’s difficult to tell just what is really going on in this market. Selling is not keen – the market just seems to drift slowly lower.
At some point, we think it will push higher, at least to the 15.85 to 16.00 level. Fundamentals continue to be strong and are even strengthening in the face of the new crop problems. The Supply/Demand Report of this morning seemed to have little effect on rice, but it did push corn, soybeans, wheat, and cotton down. We continue to urge caution if trading this market. In other markets, the Dow closed at 15118.49; the Euro was at 1.2986 against the Dollar, and nearby crude futures were at 95.97 per bbl. July grains and cotton ended the week with corn at 6.36-1/4, soybeans at 13.99, wheat at 7.04-1/4, and cotton at 86.69.
Export shipments for the week were huge at 114,200 tons. Long grain rough was loaded for Mexico (37,000 tons), Guatemala (9,000 tons), and Honduras (8,800 tons). Long grain milled and brown exports were just under 20,000 tons and went to Ghana (9,800 tons), Haiti (7,400 tons), Mexico (700 tons), and Canada (600 tons milled and 100 tons brown). Medium/short rough moved 400 tons of rough to Mexico and 2,000 tons of brown to Taiwan. Medium/short milled loaded out 37,100 tons to Japan (25,400 tons), South Korea (3,100 tons), Jordan (2,500 tons), Turkey (1,600 tons), Saudi Arabia (1,300 tons), and Canada (1,200 tons).
Texas. Louisiana, Arkansas, Mississippi Rice
Heavy rains hit parts of Texas on Friday and are predicted for the weekend as well, but we don’t yet know if they were generally beneficial or if they were too heavy. Regardless of the rain situation, the rice crop is still very far behind normal, and this is generating a good bit of worry about just when and how well the crop will start growing again.
Field yields are already expected to be down as a result of the cold weather delays, and there is now some concern about quality and milling yields as well. South Louisiana is in a similar situation, with rice having been planted weeks ago but not growing. Farmers being asked about when they expect to harvest are at a loss for an answer.
Until both Texas and Louisiana get some continuing warm days with sustained sunshine, the calendar is on hold. All areas agree, however, that the crop is at the very least three weeks behind – perhaps more. Old crop rice is long gone in Texas, and many believe that to be the case for south Louisiana, too. If something of good quality is still in first hands in south Louisiana, it cannot be much. Still, it would likely fetch a price of at least $27.00 per bbl fob farm.
New crop bids are noted at the $24.00 per bbl level fob farm but are not reported to be getting any attention. Jazzman new crop will bring a premium over regular long grain between $5 and $6 per bbl, depending on when the price is declared.
The Delta/Arkansas region got more rain Thursday night, much to the disappointment of those trying to get their new crop rice planted. The entire area is far behind in both planting and emergence, and we are told that whatever rice crop might be produced will likely be only average, a change from the hoped for good crop expected a week or two back.Those who have not been able to work fields and/or plant their rice are now looking to the prevented planting date near the end of the month, and it will not take much more in the way of rain to make that happen.
The feeling among the unplanted growers is, “why plant late and fight the crop just to get a poor yield and poor price in the process?” There is more and more talk of just taking the prevented planting payment and maybe planting soybeans or working ground during the summer. We hear of old crop in Mississippi trading this week at $15.80 per cwt delivered barge loading point, but we are also told that the better quality remaining long grain will bring $7.00 per bu fob farm from the mills.
There is a feeling that new crop rice in Mississippi will be looking for at least $7.00 per bu, and there will be lots of farm storage available since the corn was short planted, also due to the untimely rains. We hear that the mills from south Louisiana are in Arkansas trying to buy paddy to finish out their business for the current crop year. Prices in Arkansas are being noted in the $6.85 per bu area delivered barge loading facility, but that the better quality, as in Mississippi, is paying $7.00 per bu fob farm. We have not heard any new crop prices in this area.
No big changes in Asian prices this week. Thai 100% Grade B is called $535 per ton fob vessel, and Thai parboiled is now at 560 per ton. Vietnam’s 5% milled is quoted between $375 and $380 per ton. Pakistan’s 5% long grain is quoted at $435 per ton, with parboiled noted at $445 per ton. India’s 5% milled is showing surprising strength at $455 per ton, while parboiled held at $435 per ton.
This week’s news in agriculture from Agfax Media.