The rice prices in India have continued to rise as demand is strong. East Asia prices are firm but markets are quiet. There is more flooding in Argentina as the crop is being harvested in South America.
Since President Trump insisted that Mexico will pay for the border wall, the rice trade is terrified that Mexico will source rice from Asia and South America. Even though Mexico has purchased rice from both, they continue to buy a lot of rice from the USA.
We have only had one lackluster weekly export report in 9 weeks. We are averaging 90,000 tons of new sales per week, so demand is very good. We are selling long, medium, milled, and rough. The USDA released a bullish report on Friday, 31 March. However, we think the report this quarter, to be released at the end of June, will be even more bullish.
The futures market rallied before the March 31 report, but really took off on Monday April 3. The May rice contract has rallied every day this week. You are seeing the result of a commodity that has been kept almost $1 below the cost of production for 8 months. Now we are faced with the prospect of a shortage of rice if there is adverse weather in just one of the major producers.
Hope springs eternal that we in the US can and will export rice to China and Cuba. We hope that the meeting between President Trump and Xi will speed up the China negotiations. We are selling rice to Turkey and as of Thursday, there is a new tender from Iraq and Iran. I believe that the bear market is over in rice. The question is — when does the bull market begin?
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