Rice Market: Harvest Yields Very Good; Rough Week in Futures

Rice harvest. ©Debra L Ferguson Stock Photography

The rice market continues to move forward as the U.S. harvest nears the halfway mark. The export sales report for the week noted modest gains in volume over the previous week’s values. U.S. rice pricing has remained higher than overseas competitors which makes it more difficult to generate consistent sales from week to week. 

Vessel tonnage saw some decrease in volume but is still viable given the volume of sold and unshipped rice outstanding. Benchmark Asian pricing saw some price appreciation since the last report. Price moves in the current installment appears to be primarily exchange rate driven, with a large portion linked to the movements of the major indices. The USDA’s world market price estimate remained unchanged for the week which seems to underscore the general sideways movement in the marketplace as a whole.

In the domestic market, the U.S. harvest is just past the halfway mark in the Upper Delta and is complete along the Gulf Coast. Field yield reports remain very positive as do the quality reports on the first dried lots. The additional U.S. rice acreage and high yields, particularly in Arkansas, will lead to a much larger new crop than was originally anticipated. In the futures market, the open contracts on the board have had a generally rough week.

On the heels of several weeks of gains, all of the open contracts on the board posted significant losses in the past week of trading. The “new” nearby November contract is off to a rough start with roughly 6% losses, while the remaining contracts shed between 4% to 6% of value overall.

The near-term outlook is fairly business-as-usual in that harvest pressure has taken over and the industry is working to bed down the new crop harvest. The longer-term prognosis is still murky. Trade considerations are definitely having an impact on the industry but as resolutions emerge, that should begin to diminish the impact. The pricing equation will undoubtedly be suppressed with the influx of volume and quality being seen. The best strategy at this point in time is to sit back, develop a strong marketing strategy, and wait until further developments make the future outlook clearer.

The Rice Advocate


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