World Market Price factors remained unchanged again this week. The on-farm value of long grain rough stays at $11.74 per cwt.
Rice futures eased somewhat this week to Friday’s settlement at 15.31, down 32.5 cents from last week’s settlement in the nearby May contract. Even though prices fell considerably, the action appeared to all be technical in nature and actually had something of a dull feel to it. The nearby does seem to be finding fairly good buying support in the 15.25 to 15.35 range, and this makes sense considering the firmness in both price and resolve of the cash market.
The continuation chart is starting to look somewhat oversold, with both short term and long term oscillators being at or near the bottom of their ranges. This does not guarantee a bounce, but it makes the wisdom of continued selling more questionable. A move back up to the 15.85/16.25 range would not be a surprise – actually it would be a surprise if it did not do that in the nearby month at some point in the next few days/weeks. Open interest is around 7,600 contracts. We continue to recommend caution in trading rice or any other futures contracts.
It was another very good week for export sales registrations, but this week the shoe was on the other foot with medium/short grain sales accounting for over 90% of the postings. Net numbers for long grain rough were 4,900 tons, and this was added to by a net long grain milled posting of only 600 tons. These are very light registrations, but this is the reality of the market at present – some weeks very low and other weeks very high.
So far, the averages look OK. Medium/short grain sales dominated this week’s report, starting with 4,000 tons of rough bought by Turkey along with 100 tons of brown purchased by Canada. Medium/short milled was the really big hitter, though, with a total of 57,100 tons. This included Japan for 38,200 tons, Turkey for 12,600 tons, Jordan for 2,400 tons, Israel for 1,000 tons, and Canada for 900 tons. Reports are that export business is slow, but the next few weeks will give us the real picture.
Physical exports for the week were very good, too.
A total of 70,100 tons moved out of the country and included 50,000 tons of long grain rough going to Mexico (23,200 tons), Panama (18,600 tons), and El Salvador (8,200 tons). Long grain milled shipments were a bit light at 5,800 tons total, split among Saudi Arabia (2,300 tons parboiled), Liberia (1,000 tons parboiled), Canada and Mexico (900 tons each). Shipments of medium/short grain rough showed 8,000 tons, all bound for Turkey. Medium/short milled and brown loadings totaled 6,300 tons and included 1,500 tons for Canada, 1,300 tons for Jordan, 700 tons for Taiwan, 700 tons for Turkey, and 300 tons of milled and brown for Japan.
The Southern rough rice market continued its quiet mood this week. Once again there were no public sales in Texas and no commercial bids that we heard. It looks like some rice could be bought between the $9.50 and $9.00 premiums per cwt over loan for conventional and hybrid varieties respectively, but no one appears to be feeling any pressure to sell at present.
Something close to 20% of the old crop is estimated to still be in first hands. This rice will likely move fairly easily in the next month or so. Questions continue about just how much water will be available for a first and second crop for 2014/15. Planting is very near at hand, but there is very little talk or speculation about it.
Questions about just what the new farm bill means to rice are yet to be answered. Some medium grain has been contracted, and this will cut into whatever long grain acres there eventually are in the state. We are told that some small amount of planting from the air may be taking place in south Louisiana as the week comes to a close. As the weather clears, more will be seen, with a good bit of acres in this location going into medium grain this year. That medium grain was contracted at $25.00 per bbl, but long grain for the new crop has seen only price indications at the $22.00 per bbl and $21.25 per bbl levels for conventional and hybrid varieties fob farm.
Our understanding is that no long grain has been booked at this price range – these levels being too low for growers to accept. Planting has been delayed a bit this year, and this is of concern to some who are afraid the harvest will hit in too short a period and thus put pressure on prices. The medium grain cutting will come after long grain. There is no old crop medium grain left in first hands, and we are told that the small amount of long grain remaining can be sold for $25.00 per bbl – even though these particular producers want something closer to $26.00 per bbl fob farm.
The Delta/Arkansas region is quiet, too, with reports of export interest being slight this week.
Barge rates have increased, and this make pricing to the farmer even more difficult. In Mississippi we understand that trading continues fairly steadily at the $16.10 to $16.25 per cwt range delivered to mills. Delivered to a barge loading facility is showing a price of $15.56 per cwt, but this low number is getting very little interest from growers.
New crop will start planting close to the end of March, and something up to 75,000 acres is expected to be added back to rice from last year’s prevented planting rice acres. We are told that rice acres could have been better but that low price indications pushed some growers and their bankers into corn and/or soybeans instead.
There is no question that the return of the additional long grain rice acres in this region will dampen prices – the important question is by how much prices will be pressured. Arkansas continues to see some old crop trading close to $7.00 bu picked up at the bins, but many producers in this state are looking for prices at the $7.25 or higher level before the year is finished. There are a variety of estimates regarding the number of acres that will be brought back into rice for the 2014/15 crop year. Some are calling for 200,000 to 225,000 additional long grain acres, while others say that number will be lower due to a big addition of medium grain acres.
With planting on the horizon to begin around the second week of April, we should have a better idea over the next few weeks. We have been told of some rice already having been contracted out of the new crop, but it can’t be very much. We are also hearing that long grain price indications close to the $6.00 bu delivered mill or river are not very attractive to growers at present.
There is a lot of talk in Asia about big stocks, and this seems to be the case. At the same time, however, not a lot seems to be happening to soften prices, and there has even been a little remote speculation that some prices are poised to increase. As this week came to a close, Thai 100% Grade B old crop was quoted at $400 per ton and new crop at $435 per ton respectively fob vessel; parboiled slipped $25 on the week to finish at $440 per ton. Viet long grain 5% was slightly lower as well at $390 per ton. Pakistan’s prices remained unchanged at $400 per ton for 5% long grain and $410 per ton for parboiled. India’s prices also held steady at $419 for 5% milled and $405 for parboiled.