For the first time in some weeks, the rice industry has seen some significant market movements as a result of new business and demand factors.
In the export sector, the sales volume was notably decreased from the previous report. At face value, this appears to be a reversion to the trends seen in the weeks leading up to new crop harvest. With the announcement of Iraq purchasing a large volume of U.S. milled rice this week, these numbers will definitely be returning to higher levels in the coming reports.
Vessel tonnage was also reported lower that last week’s report but in aggregate is still a healthy volume for the industry.
Overseas pricing has been fairly stable over the week with only minor fluctuations in the benchmark prices. With no significant action or news in that sphere, the majority of the changes can be attributed to currency fluctuations over the week.
USDA lowered its world market price estimate over the week by $0.06 per hundredweight for both classes. This change is largely reflexive of the global stagnation that has been observed for some time now.
The domestic cash market has remained generally sideways as well. Prices in some areas are beginning to respond to the news of the Iraqi purchase. This serves to underscore the firmness of sellers and also the price points at which buyers will need to achieve to generate any purchases at this time.
As the overall impacts of additional sales volume work through the market in the coming week, the price response will provide more illumination as to what the newly found volatility will do to the sales price.
The futures market had a very positive week after the Iraqi sale broke. All of the open contracts on the board posted positive gains for the week on above average volume. Most of the volume can be attributed to this news as the November ’17 contract exited the board permanently making the January ’18 contract the new nearby benchmark.
Rice News on AgFax
To address the underlying fundamental for this week’s market moves, the Iraqi business is a very welcome injection to the market. Iraqi purchases are difficult to time and while they have historically purchased U.S. origins, the more recent tenders have foregone U.S. rice in lieu of cheaper alternatives.
Depending on the exact tonnage, the market impacts will likely reach through the end of the year at the very least, and may set the tone for the next phase in the marketing process.
If export sales from traditional buyers can come back online at consistent and historical paces, the cash market will probably enter a whole new outlook in the coming months.