Rice Update: Weather Patterns Trump Sluggish Market
USDA’s reported world market price values have decreased since the last report, with the on-farm WMP value of long grain rough reported at $9.22/hundredweight and the medium/short grain rough values at $9.47/hundredweight.
El Nino is real and is shaping up to make 2016 a year to remember. While the effects have yet to have an influence on prices, these weather patterns are far from over. Never seen such strange storms in odd parts of the world, north to south. And the Mississippi River flooding is disrupting grain barge traffic with an overall forecast of a wet spring. The old saying, there are no two years alike in the rice farming business is certainly true.
Export sales have continued over the past few weeks with moderate to small volumes, while shipments have proceeded against old commitments at a decent pace.
The Asian markets have fallen afoul of the financial market moves in that region, and while pricing has generally appreciated since the last report, we expect to see sizable volatility in the coming weeks. The world market price for rice has been decreased by USDA this week, largely due to the surging dollar and large global stockpiles. Domestically, there is very little to report as no notable sales have been made in the past week.
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As the trade gets back to business-as-usual, there will be more news although many of the buyer’s needs were satiated prior to the holiday season. The domestic futures market has seen some appreciation over the course of the week and has posted net gains since the market moves of the last report.
Rough rice futures: Monday saw the nearby January contract open at $11.575/hundredweight before sliding $0.06/hundredweight by the end of the day. Tuesday’s action saw the market surge into the $11.67/hundredweight range, while Wednesday and Thursday both posted losses sending the market into the $11.385/hundredweight range. Friday’s action saw the market close at $11.615/hundredweight to post net gains over the course of the week for the nearby contract.
Overall, the market changes ranged from -0.16% to 0.90% for all open contracts on the board. The average daily volume for the week was 689.6 contracts on an open interest of 13,525 contracts as of Thursday’s close.
In Texas, the market has remained in the $4.50 – $5.00/hundredweight premiums over loan values for hybrids and conventional respectively with no new notable action since before Christmas.
The Louisiana market has seen very few trades as both buying and selling interest are thin in this area as well.
The Mississippi, Arkansas, and Missouri markets have reported virtually no trading which is a function of both the underlying market timing as well as the flooding along the river. Overall, as the trade begins to return from the holidays, buyers and sellers are expected to be far apart given the current pricing levels.
Export sales noted a 51% decrease from last week’s values with total reported sales for the week of 51,300 MT. Sales increases to South Korea (24,700 MT), Haiti (10,000 MT), Panama (4,300 MT), and Saudi Arabia (3,200 MT), were partially offset by reductions for Mexico (100 MT)). Sales were comprised primarily of long grain rice with the exception of the Korean purchase which was composed of medium/short grain.
Vessel loadings decreased by 9% from last week’s values to a reported 33,700 MT. Primary destinations were South Korea (12,900 MT), the United Kingdom (9,000 MT), Mexico (5,700 MT), Canada (2,700 MT) and Yemen (900 MT). Loadings were composed of long grain rice with the exception of the Korean shipment which was medium/short grain.
The Asian markets have been up and down over the course of the holidays and as of this week, have seen some appreciation since the last report. Thai 100% parboiled ($358/MT) and Thai 100%B ($365/MT), and Myanmar 5% parboiled ($455/MT) each showed notable appreciation over the holidays. Myanmar 5% ($415/MT) and Pakistani 5% ($335/MT) both have settled at the same price since the last report. Meanwhile, Vietnamese 5% ($357/MT saw an incremental decrease in value as compared to pre-holiday pricing. All prices are quoted in US Dollars and are f.o.b. vessel.
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The bulls were again winners in an exciting week for longs and producers. In last week’s report, I said the markets bias would be near unchanged to a bit lower.