The rice market has remained generally sideways since the previous report and while several key reports have been issued, the market stability has not significantly changed. The export sales report provided what was probably the most interesting set of data in the weekly marketing sectors with a marketing year high volume of 145,000 MT. This number is very strong and would suggest some uptick in offshore demand.
The majority of the “new” business that showed up was the Iraqi sale of 61,000 MT above and beyond what would be considered normal buyers. The trade has known of this sale (and as such it has been factored into price) for some time now, however the official inclusion of the tonnage onto the books will allow this to influence the export demand estimates in a more concrete manner.
Vessel tonnage was also noted as being higher, indicating that previous sales continue to ship to overseas purchasers.
Asian pricing has remained sideways over the last week, although there appears to be some softness in the benchmark origins. A large portion of this can be attributed to the volatility in the financial and currency markets. Regardless, any weakening of prices widens the gap between those origins and U.S. making it more difficult for U.S. rice to remain competitive in the global market.
USDA lowered its world market price estimate for the week which is consistent with the aforementioned price declines.
In the domestic market, cash prices appear to be firming up in most areas. This phenomenon largely coincides with the end of harvest and the alleviation of harvest pressure on growers. Quality across much of the upper delta has become questionable which makes those premium lots of high milling rice move at higher prices. With many of the unknown variables now becoming clearer, the trade can get down to the business of marketing the crop.
Rice News on AgFax
The futures market on balance has traded sideways over the week. All open contracts on the board were generally trading higher through Thursday but lost momentum following the release of the November World Agricultural Supply and Demand Estimate (WASDE). Minor losses replaced the minor gains and caused the board to unilaterally close down by a fraction of a percent on all open contracts.
The monthly WASDE installment held few surprises for rice but did include revisions on both the supply and demand side of the equation.
On the supply side, the numbers from the crop production report were incorporated, which slightly lowered production to 218.3 million hundredweight. The reduction came exclusively from California. The average yield was also lowered by 17 pounds per acre nationwide to 7,522 pounds per acre. The decrease in production was more than offset by a surge in medium/short grain imports of 1 million hundredweights which increased the total supply number.
On the demand side, exports were decreased by 2 million hundredweights (all attributed to long grain classifications). The end results were in increase in ending stocks of 2.5 million hundredweights to 46.7 million hundredweights for the year. Interestingly, the season average farm price was increased by $0.30 per hundredweight at the midpoint of the range ($11.50-$12.50 per hundredweight) on stronger medium and short grain pricing.