Rice Update: Weather Complicates Planting; All Eyes On May WASDE

The rice market has remained very quiet with no significant movement in the physical cash market or underlying benchmark factors since the prior report. The export sales report for the week was “improved” as compared to last week’s numbers at 46,500 MT of sales. Moving from the abysmal 2,000 MT reported last week to the current levels is definitely the right direction, although the volume still leaves much to be desired.

The continued global political turmoil has not contributed to a stronger sales environment, meanwhile the constipated river market has made trading difficult as well which has undoubtedly impacted the total sales numbers. These obstacles will need to be overcome rapidly in order to maintain a healthy flow throughout the rice marketing chain before new crop pricing is adversely impacted.

Vessel loadings were off from the last report by approximately half, although with the low sales figures in the previous report this week’s export tonnage is not terribly surprising. The Asian benchmark pricing has remained virtually unchanged since the last report with the very minor fluctuations being directly attributable to changes in exchange rates.

No fundamental market activity is obviously apparent in the region at this time that would significantly impact the pricing one way or the other. Consequently, and not surprisingly, the USDA’s world market price estimate has again remained unchanged at the same levels as has been seen over the past five weeks. Barring any unforeseen shifts in the cash markets, it is reasonable to expect this situation to persist for another week or two.

The domestic cash markets have remained static as well (also at virtually the same values that have been noted for the past several weeks) and are unlikely to change over the course of the coming weeks unless some additional demand should materialize on the horizon. This also being unlikely to happen over the short term lends credibility to the likelihood that the market will note similar values in the cash market for a few weeks more.

The more interesting news revolves around the 2018/19 new crop production. Specifically, the weather continues to present difficulties across the U.S. rice growing region. Excessive rains have begun to stress the newly emerged rice along the Gulf Coast and has inhibited the planting ability of growers in the Mid to Upper Delta region. Growers are beginning to watch the calendar as the rains bring prevented planting insurance options closer to reality.

If prevented planting becomes fact, the actual planted acres for the new crop will become much tighter which will have a definite impact on the marketing scenario. The futures market has been across the board this week but positioning by traders in front of the May WASDE report (5/10) coupled with the position adjustments ahead of the pending US/China trade sanctions has actually resulted in positive price gains over last week’s values.

All of the open contracts on the board closed higher, on significantly lower average daily volume and on higher open interest as compared to last week. The trade generally is not expecting any major adjustments to the rice balance sheet in the WASDE report, and as such no major market swings are evident at this time.

Full report.

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