Dossett On Rice: USDA’s Outlook For Rice Acres May Be A Stretch

The Port of Rosedale - Rosedale, Mississippi - Mississippi River ©Debra L Ferguson Stock Photography

Cash Market

  • Thai Rice prices have moved up $2 to $412 MT for White 5%.
  • Vietnam price is $342 mt. Maybe that is why Iraq bought Vietnamese rice in the last tender. India rice is $370 mt.
  • Pakistan is close to Vietnamese prices @ $344- $347. USA 4% broken is priced at $513 – $517 mt. Long grain rough prices are $10.35 – $10.60 cwt.
  • There are many rice tenders pending around the world at this time. All eyes are on Venezuela as the US Government stands ready to ship rice and other foods if Maduro departs the scene.
  • Thailand has retreated on its very controversial rice bill due to intense public resistance. Critics of the bill say that it is intended to benefit large scale commercial rice producers at the expense of the smaller independent farmers. The rice industry in Thailand is very worried that the strengthening Baht will dampen the ability to export rice and other foods. Prices in India have been very steady for weeks.

In the good old USA, we are WET, WET, WET with more to come. Looking at the 2 week forecast it would be foolish to think that many farmers in the 5 long-grain states will get off to a good start on corn.

So, soybeans may be late and then rice also could be late.

The USDA Outlook Conference is predicting 2.7 million acres of rice planting this year. I will tell you I think due to low prices and bad weather you will see 2.5 million acres or less. We are hearing many reports of problems getting loans to plant rice. Of course, if China/USA tariffs end and Venezuela opens to U.S. business, the price could change quickly. However, right now, rice planting does not pencil a profit.

Futures Market

Just like clockwork, as we approach FND for the March contract, rice futures drop $1 cwt to $9.90 for the May contract. That is too far below the cost of production so we jumped right back to $10.40 cwt in 2 days.

Rice News on AgFax

There is no strong resistance in May until $10.66 cwt and the 150-day moving average is at $10.98 cwt. We are watching two things as we enter First Intent Day on Wednesday and First Notice Day on Thursday.

Potential effects:

  • There are options about to expire that could cause March to rally.
  • There is a large short position in March that will not be helped unless there are big deliveries from the co-ops. We do not see those deliveries taking place. There are 665 contracts registered for delivery. Jonesboro has 592 and 70 at McGehee. We saw 118 contracts depart McGehee on February 12, 2019.

We watch McGehee, Arkansas, very closely because it is the closest delivery facility to the Mississippi River and southernmost. To me, rice leaving McGehee is a good indication of demand for export from New Orleans. Delivery week almost always brings some wild gyrations in futures prices, but long term we must go higher to keep from losing acres.

Markham B. Dossett was a charter member of the New Orleans Commodity Exchange. He has traded rice since early 1981. He owns Talon Asset Management LLC where he hedges rice, soybeans, corn, wheat, cotton and cattle for producers in the South and Southwest. 

Futures and options trading involve significant risk of loss and may not be suitable for everyone.

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