Dossett on Rice: Global Weather Factors May Open More Markets for U.S. Exports

Rice harvest. ©Debra L Ferguson Stock Photography

Cash Markets

  • India rice prices have been in constant fluctuation for 2 weeks. Output is lower in India after a monsoon that either provided too much rain or not enough. Exports have been restricted to some of the 130 countries that India normally counts on for exports.
  • Cambodia prices have been strong as they have sold 200,000 tons to China. The rising baht in Thailand has caused a drop in Thai prices and exports. Prices have dropped from $415 in last week of September to $397 on October 4th for white 5% broken.
  • There have been floods in Argentina, Uruguay, Central America, and Mexico. Hurricanes have devastated Puerto Rico and the Virgin Islands. I see a market that is open for U.S. exports to many of these countries and a reduction in exports from those affected countries that normally supplies the Caribbean and Western South Atlantic.
  • Buyers in the U.S. have not panicked yet, but they are not getting much rice bought at $5.50-5.60 per bushel. Producers are aware of the tightening world and U.S. supplies, therefore they probably want $5.90-6.00 per bushel.
  • The yields in Mississippi and Arkansas have been great and the milling yields are even better. We heard of rice in Northern Arkansas that was under water for 7 days and still cut 190 bushels per acre.

Futures Prices

We finally had a meaningful correction. After peaking at $13.04 CWT on September 1st, futures broke down to $11.66 CWT on September 25th. We had one sale of 300 contracts at 3am on Monday morning of September 25th, and that crushed the November contract. We have recovered since then and have now stabilized around $12.00 CWT.

I can’t rule out another drop, but I will be buying under $11.80 CWT. We have seen a lot of receipts moving in and out of deliverable warehouses in McGehee, Arkansas; Harrisburg, Arkansas; and Otwell, Arkansas. Total receipts registered as of October 5th are 1,910. I am bullish for the next few months.

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. 

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