Dossett On Rice: Could We See $13 Again?

The Port of Rosedale - Rosedale, Mississippi - Mississippi River ©Debra L Ferguson Stock Photography

Cash Market

  • The cash market in the USA may be quiet, but prices are exploding in Thailand and India. Thailand 5% broken rice has rallied from $403 MMT on December 27th to $416 MMT on January 10th and now $436 MMT on January 17. India 5% broken has increased to $436 MMT.
  • Exportdemand has remained solid and weather challenges have restricted output from winter crops. Indonesia is in for 500,000 tons and Philippines needs another 250,000 tons. We just heard that Indonesia has bought 346,000 MMT in the latest tender.
  • Right now there is not much rice left until the winter crops are harvested in March.
  • In the USA, many are seeing a quiet market, but a producer in the Missouri Bootheel said that he has gotten calls from an elevator bidding 5.75 BU and offering to pick up on farm. He said the price was a little higher, but no one has offered to pick up on farm in many years.

Futures Market

  • March rice prices dipped down to $11.55 CWT. This made a double bottom on the chart from the November 13th low of $11.60 CWT. Cash bids have been $12.20-12.50. So, when futures get 80 cents below cash, the receipts start to get shipped down the river.
  • We watch the 3 McGehee, Arkansas, warehouses because they are the southernmost and closest to the river. We have seen a reduction of over 300 registered contracts since January contracts began delivery. Most of those left McGehee warehouses. We now have 1,420 registered receipts.
  • U.S. exports have been strong for a number of weeks with a brief slow down over the Christmas holiday. Weekly exports were released on Friday due to the Monday holiday. Export sales were only 40,700 MT and shipments were 52,900 MT. Don’t be surprised if they jump back close to 100,000 next week.

    Rice News on AgFax

  • The bottom line is that rice demand is strong world-wide. Most experts are expecting an increase in acres when we plant in April, but that does not relieve the short crop from last year right now. I believe you will see a rally to $12.47 soon. If we blow through that price level, you might see $13.00 again.

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 and options trading involve significant risk of loss and may not be suitable for everyone.

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