Rice Market Update: New Crop Interest Increases as Texas and Louisiana Near Harvest

Rice harvest. ©Debra L Ferguson Stock Photography

This week’s report shows some inherent weakness in most key market indicators following a lot of information for the market to digest. The export sales report posted marketing year lows of 4,500 MT in sales. Even on the heels of last week’s over 100,000 MT sales volume, this week’s number is dismally low. 

Vessel loadings were off somewhat as compared to the previous tonnage report also but were still within acceptable ranges given the recent sales volume. It goes without saying that additional offshore purchases will be necessary to generate market movement. Asian pricing continues to soften as well. Most indicative benchmarks were slightly down over the week as supply and demand factors continue to drive the market in that region as well. Conversely, the world market price estimate issued by USDA posted minor gains in the past week. Some of this could be a result of volatility in U.S. commodity pricing but with the expected lag in the estimate, a reduction is very possible in the next report.

Local cash markets are starting to see more new crop interest as the first early lots are preparing to be harvested in Texas and Louisiana. Bidding seems to be firming up and while a few lots are being traded, most growers see little downside risk at this time and are patiently waiting. The pending rice to be harvested is reported to be looking like a good crop but no formal reports on yield or quality have been noted.

Click Here to read AgFax Rice covering Arkansas, Mississippi, Missouri, Texas and Louisiana.

The futures market has been a hot topic over the week as well as rice watched its brethren ride a very fast roller coaster in both directions. Much of the motivation was Midwest weather conditions but the supply side of the equation also came into play.

Rice futures ended the week on a negative note with minor losses being posted across the open contracts on the board. A key factor in the reversal (aside from a more favorable short-term weather outlook) was the release of the monthly World Agricultural Supply and Demand Estimate (WASDE) this week.

For rice, the WASDE showed both supply and demand side changes. On the supply side, the production numbers were decreased by 9.5 million hundredweight on reduced acreage which was partially offset by an increase in exports. The demand side saw reductions in projected exports and domestic use resulting in an increase in long grain beginning stocks. The net changes on the long grain ledger were offset by revisions to the medium grain estimates resulting in no change in the total projected ending stocks.

By class, long grain ending stocks were revised higher by 1.2 million hundredweight as a result of the changes, while the medium/short grain ending stocks were decreased by 2.7 million hundredweights. The season average farm price was adjusted higher by $0.80 per hundredweight to $11.80 – $12.80 per hundredweight. The points in the report that caused some sense of surprise were the sharp increase in beginning stocks, as well as the decrease in domestic consumption. Neither of these adjustments are common in the monthly reports, especially mid-season.

Another issue that the trade has with the numbers is that the acreage is likely still overstated in key areas. Regardless the trade will market against these values and until more solid information is disseminated to the market, the official estimates are all that the trade has to work with.

The Rice Advocate

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