Dossett on Rice: Weather Delays; U.S. Tariff on India, Turkey Boosted Futures

Photo: University of Arkansas

CASH MARKET

Thai Rice has slipped $3 this week. The Thai National Assembly has backed away from passing the Rice Bill because of renewed farmer pressure.  India White 5% Broken rice is prices at $368-$372 and Vietnam is selling for $343-347. US 4% Broken rice is trading around $513 – $517.  

The BIG, BIG news in the rice market this week is that President Trump has directed an end to the program that let India and Turkey export rice to the USA at no cost. India sold 187,000 MT of rice in USA in 2018.  There will now be a 3.1 cent per pound tariff on India rice and an 11.3 cent per pound tariff on par-boiled. Turkey was the 4th largest buyer of US rice 5 years ago. Now they have a 50% tariff on US rice and they are the 62nd largest export market for US rice.

The President’s announcement resulted in a nice boost in the futures on Thursday, March 7. Weather is the focus of most planters in the 5 long grain states and California on the medium grain.  It seems like all rice-producing states are saturated with rain and more is in the forecast.

Right now, only the corn is affected but once the planting sequence is delayed, we are late corn, then late soybeans, then late wheat harvest.  Texas is the one state that may be planted on time, but the problem there is the increased cost of water from the Lower Colorado River Authority.

FUTURES MARKET

Rice futures had its normal swoon right before FND of the March Contract. Then as usual, the price for May came roaring back as cash prices have been steady at $10.35 – $10.60 for 4 months.

We received a series of great export numbers as the USDA got caught up after the government shutdown.  Thursday, March 7, we reported 88,300 MT to Central America and Mexico.

Last week’s report was 110,000 MT.  May futures found resistance at the 50 Day Moving Average at $10.65 last week. However, rumors of large export tenders, fear of planting delays, and news of the import duty to India and Turkey rallied the market to $10.975 on Thursday. The 150 Day Moving Average is at $10.90, so that proved to be resistance.

I’m watching the trend line off the October 18 high. It comes in at $11.00.  IF we get a couple of big tenders and weather forecast does not change we might trade above $11.00.  That technically would open this market up to big short covering and price we have not seen since last July.  Friday 8 March USDA reported US exports will be up 11,000 CWT as US rice is more competitive.  Global rice supplies are raised 6.3 MMT, most from India.  Planting intentions will be released in March 29 NASS report.

I remain positive about higher prices but we need to sell more rice to the export markets.

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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