It has been another very quiet week in the rice industry as most of the major market indicators suggest that a minor retraction is in the works. Asian pricing over the past week has continued to decline against the values seen over the previous weeks.
The supply/demand balance in that region appears to be tipping toward the oversupply side again which has kept prices depressed. International financial markets have undoubtedly had an impact on these markets as well, as has the advent of the Chinese New Year. For the next several weeks, pricing from that region will likely be both lower and sparse as a a result of the celebrations. The export sales report for the week indicated a net total sales volume of 57,200 MT which is the same amount reported last week.
While upward shifts in demand are highly desired, there is a lot to be said for consistency as well. The export tonnage was reported as 55,200 MT, which is stronger than the previous report. As sales continue to show up on the balance sheets, consistent shipping numbers are key to keep rice moving through the system.
USDA released its world market price estimate this week and decreased the price for both classes of rice by $0.20 per hundredweight for long grain and $0.21 per hundredweight for medium/short grain respectively. The domestic cash market remains very quiet with virtually no changes aside from basic adjustments in any region. The demand side of the cash market has remained fairly constant, largely due to volumes purchased in the previous few weeks. The supply side as a result has become very quiet with very little left to sell in first hands.
The remaining old crop will most certainly need to see significant price increases in order for it to be released prior to new crop harvest. The futures market took a swing to the lower end of the spectrum since the last report. This was particularly true for old crop contracts which shed nearly 3% in value over the past week. New crop open contracts fared better with posted losses around ¼ of a percent for September ’18 through March ’19.
There is unlikely to be any news of significance in the domestic sector until the March 30 prospective plantings report comes out, although the market could respond positively to any new sales that might materialize in the coming weeks. Until more information is apparent, sellers should settle in for the long haul and seize any opportunities that arise.