Rice Update: Exports Drop as Planting Begins
Another week has come and gone, with only minor changes to the fundamental aspects of the rice market. Unfortunately, this appears to be “business as usual.” The domestic market has shown virtually no change from either a pricing or a sales standpoint.
As has been noted in previous reports, the market has ground to a halt and growers remain uninterested at the current prices. Also, significant quantities of rice were sold earlier in the season which has left a much smaller inventory in first hands than normal at this stage in the marketing year.
With no significant opportunities being readily apparent, the domestic cash situation is unlikely to change in either direction over the near future.
The export sales report showed a decreased volume for the week as compared to previous week’s levels. The market has successfully kept sales volumes at nominal levels for the better part of the past two months however the current week’s tonnage suggests that there may be some additional weakness in the market.
Vessel loadings have also tapered off in the current installment, albeit only in comparison to the previous week’s levels. With the amount of business on the books, vessel tonnage should remain consistently strong for the next week or two at the least.
In other government reports, the weekly World Market Price release from USDA indicated a moderate decrease in the price estimate. This marks the first price decrease of the year but is not very surprising given the general lack of movement in the various sectors. Asian markets have also been sluggish and sideways, with the price movements in that region being due to almost exclusively to currency fluctuations.
On a positive note, the futures market posted solid gains over the week as the March ’17 contract exited the board, giving way to the May ’17 contract as the new nearby indicator. With modest to low volume and average open interest, there is not much to be noted in this sector either.
At the farm level, growers are either planting or making final preparations to do so pending the weather in the coming days. Actual acreage estimates have ranged from 300,000 less than last year or higher and while a decrease is expected the final magnitude is anybody’s guess. Longer term outlooks suggest that soybeans will gain significant traction on many of the acres but the volatility in the marketplace has growers still waiting to make a final call.
With hard work and more than a little luck, hopefully the trade can get the rice market back on its feet in the coming months so that growers can have a respite in the coming year.
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.