It has been a soggy week in the rice industry with most of the U.S. regions reporting saturated fields which has impeded harvest in some areas and second crop development in others. From a marketing standpoint, very little has changed in the benchmark indicators, although with the influx of government reports the global picture has become a bit more defined.
The export sales report this week noted an increase in sales by a few hundred tons. While (marginally) higher than last week’s volume, the current figures are still a far cry from where the market needs them to be. There was some hope that the Iraqi’s might purchase another order of U.S. origin, but the likelihood of this coming to pass appears to be dwindling. Additional pressure to move rice is being felt, especially in the South, but it would seem that buyers and sellers have yet to come together on an acceptable price.
Vessel loadings made a marketing year high in the current report as the trade continues to ship against prior commitments. This will help ease the immediate burden of old crop in storage, but given the dearth of new sales, will likely be short lived.
Asian pricing remains virtually unchanged since the last report, with the minor fluctuations being chalked up to currency adjustments. As if to confirm the quiet undertone, the USDA has held its world market price estimate unchanged as well.
In the domestic cash markets, pricing is beginning to slide downward with harvest pressure. In most areas, this does not sit well with producers, however the realities of a bumper crop in conjunction with old crop still in storage has left many growers with little choice.
The recent spate of rainfall that has impacted the rice growing areas of the U.S. has put a damper on both harvest and second crop development, but for now the worst appears to be in the past. Unless the weather deteriorates in the next few weeks, it is unlikely to have a significant impact on the new crop harvest.
Rice futures had a generally positive week, with almost all of the open contracts on the board closing in positive territory over last Friday’s trading. The exception to this was the nearby September ’18 contract with closed down as traders work to roll their positions into the November contract prior to expiry.
In other news, the USDA released its monthly World Agricultural Supply and Demand Estimate this week with several adjustments being noted. On the supply side, total supply was raised by 3.3 million hundredweights. This adjustment was reflective of stronger production resulting from higher harvested acreage (FSA certified acres were used in this installment) and an increase in the average yield by 40 pounds per acre. The resulting change offset a lower beginning stock number.
Of the increase in production, long grain accounted for 5.8 million hundredweights, while medium/short grain production was increased by 2.8 million hundredweights. On the demand side, the domestic use estimate was increased by 2 million hundredweights total.
The net impact was an increase in ending stocks of 1.3 million hundredweights to 44.9 million hundredweights and a decrease in the expected season average farm price of $0.20 per hundredweights.