Dossett On Rice: Pricing Opportunity Possible, Even With More Acres In 2018

Rice harvest. ©Debra L Ferguson Stock Photography

Cash Markets

  • Rice prices in India have rallied again after remaining quiet for 2 weeks. We know that India is having major problems with their wheat and cotton crops, and I wonder if we will not have rice problems as well.

  • Exports remain strong to Bangladesh and Sri Lanka. Bangladesh is buying 200,000 tons from Myanmar in a G-to-G deal.
  • Thailand prices for 5% broken are stable at $403. The Thai government has a new campaign called “Think Rice, Think Thailand”.  It is aimed at promoting export of premium grade rice. They want to get away from just selling low cost commodity rice. The premium grades will include hom mali, fragrant rice, and colored rice. Vietnam announced a similar program last summer.
  • Thailand is interested in G-to-G sales with China, Iran and Nigeria.
  • As we watch the Argentina and Brazilian crops, we see that Argentina is having a port strike. This will halt export of all grains.
  • Iraq recently bought 30,000 MT of Argentina rice at $568 CIF FO. USA bids on that tender were $667 CIF and Thailand was $459 CIF. India bid $462 CIF.
  • U.S. markets were quiet, with some new players in rice offering contracts for the 2018 crop. They are reportedly bidding a strong premium if you agree to plant two specific types of seeds.
  • New export sales for the week of December 15-21 were 105,700 MT, with increases for Japan, South Korea, Mexico and Guatemala.

Futures Market

  • Friday, December 29, was FND. There were 941 delivery notices. We have 1,817 registered contracts, so I expect most to be delivered.
  • One firm that normally does a lot of business with the Arkansas co-ops delivered 102 contracts and then stopped 109 contracts. We probably will continue to see a few contracts move down the river for export in groups of 5 to 20, but I expect most deliveries will be re-owned by strong hands.
  • I believe we will see a big increase of rice planting in the 5 southern states this spring as soybean, corn and wheat are below cost of production. Rice and cotton are the only traditional crops in the south that pencil a profit at this time.
  • Even with a possibility of higher planting, I believe rice futures will re-attack the $13.00 level one more time before the 2018 crop is planted. I am still bullish at this time because demand is strong.

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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