Rice Market: Late Recovery from Early Week Losses
World Market Price factors were again left undisturbed by USDA this week. The on-farm value of long grain rough holds at $11.63 per cwt.
Rice futures broke fairly sharply early in the week but started to recover on Thursday and Friday. The nearby July settled at 15.40 up 2.5 on the day and just 3 cents under last Friday’s continuation chart close. Friday’s settlement is still below the wide band of technical congestion, so next week could tell the tale. It looks to us like the shorts are getting caught again, and if that is correct, a further rally (maybe approaching the 15.80 mark) should be seen in the next week or two.
We believe there is still rice that needs to be covered before the new crop is even close to being ready, and a number of buyers have very likely taken long positions at the lower July numbers earlier this week – these levels are attractively lower than current cash offers on the small amount of old crop that may still be available.
We find it interesting, too, that the new crop months have actually shown some strength, with the Sep and Nov ending the week at 14.47 and 14.605 respectively, both slightly higher than last weeks ending prices. As always, we recommend trading rice futures or any other futures contracts with care.
Texas is down to about 150,000 cwts of old crop long grain still unsold. The last sales noted ranged between $9.25 and $9.35 premiums per cwt over loan, and it should not take long for the remaining lots to sell.
It’s around 3 months to availability of new crop, with the late planting pushing the usual dates back by a week or two. New crop is just about all in the ground now.
The need for some rain was quenched by very heavy showers earlier this week, and that has had some farmers draining fields. The only new crop pricing we have heard is the $7.00 (with ups) contract we mentioned last week. Otherwise, things are slow and fairly quiet.
South Louisiana got some of the same rains that hit Texas, but in much lighter doses. We were told that the rains there were very beneficial and helped the soybeans and crawfish as well as the rice.
The new crop is reported to be looking very good, and even though a little catching up has taken place, the cool nights don’t seem to be allowing any real gain on the harvest calendar – dried rice is not expected late for this area.
Bids for medium grain are still active at $25.00 per bbl fob farm. Long grain bids are still not at the levels that farmers want to see $24.00 per bbl fob farm or higher. We understand that the bids that are active in the market range somewhere between $23.50 fob farm to $23.65 delivered Mermentau, mostly for fairly early delivery.
Some rice may have been booked at these levels, but we cannot confirm how much was committed. Any old crop long grain that may still be in first hands cannot be very much, but it can still get $25.00 per bbl fob farm we are told.
Export sales had another light week at a net of only 14,100 tons. A sale already posted as unknown was changed to Venezuela and totaled 35,800 tons. That was followed by 7,500 tons newly sold to Honduras. It is quite a positive note to see the Venezuelans taking our paddy again. Long grain milled and brown totaled 5,600 tons, with Haiti, Canada, Libya, and Mexico topping the list. Medium/short milled and brown sales were 2,700 tons, with Saudi Arabia, Canada, and the UAE being the buyers.
The sales situation must be taken on a week-to-week basis, and we have to recognize that our supplies may be so tight that more big sales may not be feasible before new crop is in the bins. We had expected more long grain sales further into the current year, so we may get a surprise or two. These light sales had no effect on the futures – they were up both Thursday and Friday.
Export liftings were very good at 86,600 tons for the week. Long grain rough was the big hitter at 74,700 tons, with 65,800 to Venezuela, 7,200 tons to Honduras, and 1,800 tons to Mexico. Long grain milled and brown totaled 5,200 tons, with Canada taking 1,600 tons of milled and 300 tons of brown, and Mexico taking 1,300 tons. Medium/short rough shipped out 300 tons to Mexico.
Milled and brown saw 6,500 tons where Taiwan took 2,000 tons of brown, added to by milled going to Saudi Arabia (1,000 tons), Canada (900 tons), Jordan (900 tons), and Japan (400 tons). We’d like to see more milled in this mix, particularly on the long grain side of the ledger, but, all-in-all, this was a good week for exports.
Asian prices this week showed Thai 100% Grade B at $385 per ton fob vessel, with parboiled now at $408 per ton. Vietnam’s 5% long grain finished the week at $410 per ton. Pakistan’s 5% milled was called $425 per ton with parboiled holding at $440 per ton. India’s prices were $425 for 5% long grain and $400 for parboiled.
The bulls took a break this week with the ICE July and Dec contracts giving back 46 and 34 points on the week, respectively. The July – Dec straddle finished