Dossett On Rice: Indian Market In Flux, U.S. Ponders Planting Intentions

Rice harvest. ©Debra L Ferguson Stock Photography

Cash Market

Rice prices in India are trading between $408-412 for 5% broken. It is really exciting to see the wild fluctuations day to day in India.

This has been an active and strong week for India business because of African demand. Africa usually buys parboiled, so those prices are $423-427.

Thailand prices backed off $4 to $424 for 5% broken. Thailand continues to forecast 9.5 MMT in exports for 2018. A report in one Thai newspaper claims world rice production will decrease to 484.33 MMT with decreases from India, Bangladesh, he U.S., South Korea and Japan.

China and Indonesia are currently buying Thai rice. Panama is bidding for 100,000 tons this week.

U.S. markets are steady at $12.50-13.00 CWT as farmers in Mississippi, Arkansas and Louisiana are wondering when they will dry out enough to plant corn. It is too early to make a definite prediction, but if we fall behind in corn, then soybeans, that might mean delayed rice planting later.

The weather pattern is locked into drought in West Texas and Oklahoma, with floods in the Deep South. We are all watching the calendar. The pattern is not predicted to change soon.

Futures Market

Just when it seems that rice futures are about to start another correction, we see solid buying and we stop short of the big support of $12.15 on the May contract.

We also are watching the spread between May and July tighten into 13-15 cents. That is about half of the normal carrying charges.

September rice is at a big discount to July due to the belief that there will be large acreage increases in the U.S. I believe we will have healthy increases but not enough to get back to the acres we saw in 2016-2015.

Even if we have a sizeable increase, I see NO indications that we will have optimum planting and growing weather. We are in a La Nina pattern that could throw some curveballs. Therefore, I am bullish on May and July futures and will want to see final planted acres before making a commitment on September.

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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