It has been another mundane week in the rice industry from a marketing standpoint. The only significant news of note was the issuance of the monthly WASDE report by USDA which shed some additional light on the state of the rice industry and sprinkled a little optimism on an otherwise difficult market.
The export sales report for the week was noticeably improved over last week’s numbers and has gotten the new marketing year off to a good start. Continued sales of similar volume will go far in keeping the market moving and stable.
Vessel tonnage was off somewhat as compared to the previous week’s volume; however the limited sales of the past weeks tend to justify these lower numbers. In the coming weeks it can reasonably be expected to see higher numbers in both the sales and shipping columns.
Asian pricing has been predominately sideways since the last report with some minor price depreciation noted on key benchmark prices. Much of this is simply timing in conjunction with regional supply and demand considerations. There being no significant supply disruptions on the horizon suggest that these prices will likely remain fairly stable over the short term.
The world market price estimate for the week was unchanged from prior values lending additional credibility to the likelihood of a stable global pricing scenario for now.
Local cash markets have been responsive to the supply constraints placed on the U.S. crop with minor but undeniable gains. The firming of the cash markets across the rice growing region continues from week to week and producers seem content to let the trend establish before committing any substantial volume.
On the production side, early reports from farm country are generally positive.
Texas and Louisiana are well over halfway done with the first crop harvest with reported field yields above 7,500 pounds per acre in most areas. Growers are reporting yields in excess of 8,200 pounds per acre in some instances. Milling out-turns and quality remain high at this point although the first lots have yet to finish drying before they can be “officially” graded. The above average quality was sorely needed by the industry in light of past years’ quality.
The big news of the week was the WASDE report.
While not well received by any of the other major commodities, this installment was generally positive for rice. On the supply side, the estimate reduced total production by 5 million hundredweights on lower production. This was enhanced by a reduced yield projection of 194 pounds per acre to total 7,513.
Of the 5 million hundredweight reduction, long grain accounted for 4 million hundredweight. The production decrease was partially offset by a reduction in domestic usage on the demand side of the equation.
The overall impact of all revisions was a net decrease of ending stocks by 2.5 million hundredweight to 30.0 million hundredweight. This represents the lowest projected ending stocks since 2007.
The season average farm price was correspondingly raised $0.40 per hundredweight to a new range of $12.20 – $13.20 per hundredweight.
As the industry digests all of the “new” information, the concepts that emerge as being concrete are that there is significantly more upside potential in the current market than downside risk and that further revisions in the future will be forthcoming.