Dossett on Rice: Expect Reduced Acreage to Produce Some Excitement

Cash Prices

  • Prices in India continue to fluctuate every week. The monsoon stalled in some areas of India but Sri Lanka and Bangladesh are buying from Pakistan and Vietnam. This morning Sri Lanka and Bangladesh asked Thailand to provide prices for 400,000 tons of rice.  
  • Overall prices in India and Thailand are trending lower as demand has slowed.
  • Thailand prices are $400-405 per ton down from $460 one month ago. India prices are $411-414 per ton. The rupee has appreciated and that also led to lower rice prices. Iraq is back in for another tender. Our guess is that Uruguay or Brazil will get that business.
  • The Bangkok Post reports that Bangladesh and Sri Lanka are in talks with Thailand “for an urgent purchase of 400,000 tonnes of rice to replenish their falling stocks.
  • U.S. long grain production is still in question. We cannot have any weather problems, if we hope to have decent yields. Don’t hold your breath for USDA to be accurate on prevent plant or abandon acreage. They will probably not be accurate until the September Report. U.S. Exports finally took a nose dive last week. This is not surprising. What is surprising is how strong exports were for most of June into the first week of July. The early rice is being cut in Texas. Yields are mixed.

Future Market

  • We finally had the correction we had been waiting for. I do not rule out further move down in prices, however.
  • I believe prices by September will be much higher as the crop gets harvested. There are many end users who are not covered, and as prices rise producers tend to hold for higher prices. We do not have a buy signal yet but probably will by next week.
  • We are finishing up delivery of the July Rice contract. As of Monday we had delivery of 1,770 contracts. That was about 20% of total contracts in open interest. Right now, open interest in September rice is 8,349. We currently have 1,818 contracts registered for delivery against the September contracts. Stay tuned for an exciting finish to this year’s rice crop as reduced acreage will undoubtedly cause large fluctuations in prices.

Markham B. Dossett was a Charter member of the New Orleans Commodity Exchange. He has traded rice since early 1981. He owns Talon Asset Management LLC where he hedges rice, soybeans, corn, wheat, cotton and cattle for producers in the South and Southwest.

Futures trading is risky and not suitable for all customers.

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