Dossett on Rice: Market Bounce Back

Mid-season rice field. ©Debra L Ferguson

Cash Market

Thai rice prices moved up another $2 MT this week. The Bangkok Post reports that demand for glutinous rice is so high that there is increased smuggling from Vietnam via Cambodia into Thailand.

China has stopped importing rice from Vietnam because of political tension. China has announced it will import US $500 million of Myanmar rice instead. Export prices are also up in India again this week. Not only is the monsoon late on the east coast but now there is a major typhoon on the west coast of India and Pakistan.

The weather in the 5 U.S. long grain states has given planters a break for a week but the 6-10 day forecast calls for more rain, especially in the Northern Arkansas, Southern Missouri area.

USDA Reports

On Tuesday, 11 June the USDA reported World Agriculture Supply and Demand, which called for slightly lower supply. But I believe there will be a major supply decrease in the July and August report due to Prevent Plant. There will be a quarterly stocks report on June 28 – the first survey of actual planting. The world rice stocks are forecast a little less than 700 mm tons. I believe that number will decline as the summer progresses.

Futures Market – Bounce Back

Nervousness about a potential tariff with Mexico and pre-report jitters caused a selloff on Monday and Tuesday prior to the USDA report. The report did not shock any experienced traders so there was little action on Tuesday, June 11 at 11:00 CDT.

On the June 12 futures bounced back. The fact that corn, beans, and wheat all jumped on the shocking corn report probably helped but the forecast for more rain in MO, AR, and MS was also bullish.

Rice remains overbought but I believe it will stay overbought. Don’t forget that not only will Prevent Plant acreage increase, we believe as much as 100,000 acres switched from long grain to medium grain.

There are small changes at this time in certified stocks, 661 remain available. Remember the stocks report will be released on the same day as FND for July futures. Weekly exports reported on Thursday were 66,000 MT, the biggest buyers were Mexico 20,900 MT, Venezuela 12,600 MT, Libya 11,500 MT and Panama 6,300 MT. These are solid numbers and our usual customers.

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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