Rice Market: Futures Show Strength but Exports Weak
USDA raised World Market Price factors this week. The on-farm value of long grain rough rose 20 cents to $11.83 per cwt.
Rice futures showed some strength this week, making a high on Thursday, and closing today near the high for the day after selling off in the morning. We noted this week that the settlement price one year ago was within one cent of the current market — a true definition of a sideways market.
Dips are being met with buying interest, and not generating big selling. The May contract has gone into delivery this week, and so far 178 contracts have been tendered, with the open interest falling to double digits — another sign that futures prices are too low to attract big selling, and that the cash market remains too high to play the delivery game on large quantities.
The market remains wary of new crop, feeling that prices will fall quite a bit from current levels. Given the delays in planting in the Delta, this is increasingly unlikely, although September futures remain $1.00 below July futures. If trading futures, be very wary of the short side – this is our opinion.
It was a below-average week for export sales, with only 11,800 tons registered with USDA. Missing were any large sale of long grain rough rice, with the minor exception of 500 tons sold to Honduras. Long grain milled and brown sales totaled 8,100 tons, with the majority going to Haiti (6,300 tons), Plus Mexico and Canada.
The Medium/short brown sand milled categories combined for an underwhelming total of 3,100 tons to Canada, South Korea, Japan, and Jordan. Easter Week, and a mid-week holiday (international Labor Day) this week provided some excuse for low levels of trading.
This week’s export loadings totaled 56,000 tons, with long grain rough in the lead with a total of 23,100 tons split among Honduras, Guatemala, Costa Rica, and Mexico. Long grain milled and brown shipped out 8,100 tons, including 6,300 tons to Haiti.
Canada, Mexico, and Yemen received most of the balance. Medium/short shipments were 17,600 tons, with 2,000 tons of brown leaving for Taiwan and 13,000 tons sailing for Japan — both from California. Exports to Jordan totaled 1,700 tons this week.
For yet another week, there have been only minor negative changes in Asian prices. Thai 100% Grade B finished the week at $390 for old crop and $400 for new crop, with parboiled at $420 per ton – all fob vessel. Vietnam’s 5% milled was called $390 per ton. Pakistan’s quotes were $420 for 5% milled and $440 for parboiled. And Indian rounds out the area quotes with $420 for 5% long grain and $400 for parboiled.
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,