Dossett on Rice: Rally Call – 2 Items Have Changed Last Week’s Picture

Rice harvest. ©Debra L Ferguson Stock Photography

Rice Cash Market

Prices in Vietnam are strongest in four years at $453.00.  Rice in Thailand is one dollar higher this week, $450.00 for white 5% broken.  India prices are higher by a little.  Pakistan has gotten tender due June 12, from Iran for 20,000 MT.  10,000 would be Super Basmati.  We have a very strong world market! 

In USA we have a quiet cash market with bids and offers far apart and little rice left to be sold.  Weather is all over the map with everything from perfect to problematic.  There is a storm brewing in the Gulf of Mexico.  Looks like it will head due north to Mississippi – Alabama coast. Landfall is predicted by Monday afternoon.

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Rice Futures Market

Last week I predicted a rally soon.  To be generous, I would admit to being early on that call.  Two important factors changed that picture.

  1. Banks and short sellers do not like the inverted market with July over September. They have hammered the spread by selling July.
  2. Producers Co-op deadline for pricing Grower Option is Thursday, May 31.  I’ll bet they know exactly how much rice they will be getting on G.O. and “hedged” it starting Monday resulting in major pressure in July.  We also saw a sale of 600 Rice options by one of the major Co-ops on Tuesday.

That has resulted in massive selloff that has been characteristic of rice through the years.  When trading a thin market, you must be aware this is always a possibility.  Bottom line is rice is now very inexpensive considering worldwide demand and lack of available rice.

We see strong commercial buying among the short covering.  Receipts continue to be taken down the river because that is the cheapest way to get good quality.  We have been in a bull market in rice since April of 2017 and I believe we will stay in a bull market for the rest of the summer.

Next week’s actions will determine if I am early or if I am wrong.

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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