The rice industry continues to move along with even more news to digest since the last report. The weekly export sales report indicated another boost in net sales nearing a total of 58,000 MT for the week. This number remains far from optimal but is still enough to be considered healthy for the industry.
Additional sales to Iraq or even a few thousand metric tons to Central or South America would be highly welcomed at this time in an effort to alleviate the current glut of rice in the marketplace. Vessel loadings were notably higher than last week with volumes nearing 95,000 MT.
Some of this is reflective of the recent high-volume sales but the remainder is an indication that old sales on the books are beginning to be filled. Both of these scenarios are positive for the near-term market outlook.
In Asian markets, the benchmark origins were mostly sideways over the week with some price weakening in key areas. The magnitude and direction of the changes seem to suggest that changing currency valuations had the lion’s share of the action as opposed to true supply and demand fundamentals.
USDA released its world market price this week and ultimately lowered the indicator for both long and medium/short grain classes of rice. This comes as a minor surprise, but optimism remains for an upward adjustment to occur in the coming weeks. The futures market had a rollercoaster ride over the week after last week’s massive gains.
The trading action started out bullish with a continued rally, but the interest rate increase on Wednesday sent the financial markets into freefall and ultimately dampened the momentum in the rice market. Thursday’s WASDE report was more neutral to bullish than anything else, but the futures contracts had a different take and the resulting decrease brought the open contracts on the board back into negative territory for the week.
Rice News on AgFax
The domestic cash markets continue to soften as harvest pressure from the Upper Delta weighs into the equation and has the expected effect of suppressing prices down river. Along the Gulf Coast, storage is still an issue (especially in Texas) which is having a similar impact in those areas. The harvest in Mississippi is in the final throes while Arkansas and Missouri report well over two thirds of the rice having been harvested at this time. Quality reports indicate lower milling yields in those areas than was hoped for.
In other news this week, the UDSA released its monthly World Agricultural Supply and Demand Estimate (WASDE) with no significant surprises. The revisions for this month were exclusively on the supply side of the equation and consisted primarily of a decrease in average yield by 24 pounds per acre.
This decrease led to a downward revision in the overall supply number by 700,000 hundredweights. With no demand side revisions (the Iraqi sales having seemingly been already incorporated into the estimate) the ending stocks estimate was adjusted accordingly by 700,000 hundredweights with no impact on the season average farm price projection.