For the first time in months, some activity is beginning to materialize in the rice market both from a production and a marketing standpoint. Asian pricing this week generally appreciated between 1% – 3% in the benchmark origins. These price gains appear to be a result of market forces more so than currency exchange rate based on the magnitude of fluctuation. It will be interesting to see if the price trends continue over a longer period, especially as the U.S. crop comes on line for export opportunities.
The export sales report for the week was surprisingly improved over the previous weeks at 58,000 MT which represents a significant increase over last week’s dismally small volume. Early sales against new crop are beginning to be made which helps to kick the marketing year off to a good start. As more volume becomes available, it can be hoped that the total sales will further appreciate into the 70,000 MT or better ranges.
Vessel loadings were modestly higher than last week’s report as well. Continued movement against old sales helps to maintain some sense of market liquidity that has been absent in recent weeks.
USDA reduced its world market price again this week for both classes. This appears to be a reflection of the lethargy generally seen in the global marketplace over the past month. Until new crop price discovery has occurred more thoroughly in the coming weeks, this number may be more volatile than usual.
The futures market had a generally good week leading up to Friday’s World Agricultural Supply and Demand (WASDE) report although upon its release, the market shed all of the residual gains posted over the week. At Friday’s close, the open contracts on the board were all in the red, with losses ranging from 6% – 9%.
In the domestic cash markets, the harvest is well underway in Texas and Louisiana with field yields being reported between 8,000 – 9,500 lbs. per acre green and quality appearing to be acceptable. Loyant herbicide damage is rife and those lots that have reported damage are experiencing both yield and quality problems.
The first dry lots are already being graded in Texas and after a greater quantity has been graded then it will be clearer as to the extent of the damage. Further north, growers are watching the weather as the crop gets closer to harvest and the next few weeks should see a significant amount of rice harvested along the river.
Rice News on AgFax
As was mentioned previously, the USDA released its WASDE report this Friday with no major surprises for the rice industry. The most current installment showed beginning stocks estimated at 2.5 million hundredweights higher based on a reduced export number that was partially offset by stronger domestic consumption. The total production number was decreased by 2.1 million hundredweights for the year, primarily as a result of lower long grain production and reduced yield expectations.
On the demand side, exports were reduced by 4 million hundredweights as a result of lower pricing from export competitors in Asia and South America. The net result was an increase in ending stocks to 43.6 million hundredweights total and a decrease in the expected season average farm price by $0.20 per hundredweight at the midpoint of the range.
This reduction resulted in an expected price range of $11.40 – $12.40 per hundredweight. As always, the harvest pressure generated over the next two months will serve to depress prices during the short term.
The real question revolves around how competitive exports can become later in the year and the resulting impact on farm pricing at that time. Much of this will depend on the outcome of the pending trade negotiations and also how well the crop in overseas exporters’ countries develops during the interim.
For the time being, the best move forward is to get the new crop in the bins and continue to aggressively lobby for increased export sales in the coming months.