Dossett on Rice: Be Prepared for Swings – Manipulators are Out There!

Cash Market

International rice prices are firming up after a 5 week drop. Thai White 5% traded at $397 MT this week. India is priced at $412 and Pakistan is $399. Vietnam is holding at $387. U.S. prices are still very strong at $562 MT and $12.00 CWT rough. 

U.S. CropChallenges

Arkansas is in a bad drought but does have a big rain forecast next week. We hear grass problems are so bad that many fields will not be harvested. The South Texas crop looks good.  and the Louisiana crop looks good but is also extremely dry. Some producers have started draining in Texas. Rice is still a bull market in the U.S.A.  because there is no rice available and demand is strong.

Futures Markets

I repeat again, this is a bull market and has been since May of 2017.

You ask, if this is a bull market, why did the July and Sept futures drop to $10.50 in May? You must understand that because rice is thinly traded it is also easily manipulated by large Arkansas Co-ops, major rice exporters and Algorithm computer traders. If you don’t like that please tell your congressman to complain to the CFTC and have some hearings on national TV.

As we go forward into Sept. there will be rice available to register but right now as we predicted there are a total of 85 contracts certified for delivery, down from 1,500 last year. I am sure they all have a home and are just waiting to be shipped out.

We hear that the last big shipment of rice went to Haiti. It does not matter where it went, all you need to know is that the rice is gone and there will be no more till September.

The futures should go up $12.50-$13.00 but we have a large and strong group that likes to knock rice futures down and then lock in low prices. Therefore I will not buy again until we close below $11.00. I recommend selling 25% of your crop at $12.00 basis September. I would sell another 25% at $12.50. Be prepared for $1.00 swings in both directions because the manipulators are alive and well!

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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