Another quiet week has come and gone in the rice industry as the biggest domestic production hurdle to be addressed for the week seems to be how to get planted. Internationally, the benchmark Asian pricing has been sideways to slightly upward, with some minor price fluctuations to both the up and downside in the meantime.
The supply and demand equation in that part of the world appears to be relatively balanced with some minor strengthening on a weekly basis, so from the U.S. point of view the market continues to have strong undertones. The USDA seems to agree as it has again increased its world market price for both long and medium/short grain classes again this week. This marks the second week in a row that this has occurred.
Of note is that the WMP estimate has not decreased in over a month suggesting that a long-term uptrend may be establishing itself.
The export sales report for the week was mediocre in both tonnage sold and shipped. After the larger 90,000 MT or better sales seen in prior weeks, the current 44,000 MT reported sold is not very exciting. It is however good to note that rice is still flowing through the system. Continued and consistent export sales will be very critical in keeping the balance sheet in producer friendly territory as new crop harvest looms in the coming months.
The reported vessel tonnage was not particularly strong for the week, but neither was it low. With large sales on the books yet to be shipped, this number should grow in the next few reports.
The futures market was a mixed bag between old and new crop pricing, with old crop posting moderate losses and new crop contracts seeing moderate gains. As the market digests the news and speculation (specifically trade related rhetoric and ideas about new crop quantity and quality), the market is responding. As these issues become clearer, the market should stabilize. While there seems to be firm upside potential, it is still too dangerous to rule out a downside reversal.
Domestically, the old crop cash market remains stagnant. Prices are relatively unchanged from the prior report(s) and this is largely a function of supply rationing. The little old crop remaining in first hands is minimal and it will require a notable change in cash pricing to extract.
The demand side is complacent as most buyers have procured enough inventory to hold until new crop so unless some major demand side shifts take place, this current scenario will persist.
For new crop, growers along the Gulf Coast have either planted or are finishing up the last fields. The cooler weather has not been as hard on production in the coastal regions as in the more northern states and as of now, moderate to good stands are being reported across Texas and Louisiana.
Mississippi is aggressively trying to get the rice in the ground although across the river in Arkansas, weather concerns have growers trying to get the timing down.
The long-term impact of the weather delays will ultimately be some shift in planting intentions away from rice and into corn or soybeans, depending on which looks most attractive at the time. In a month or two when all of the seeds are in the ground will be the final arbiter to the question.