The big news this week came from USDA’s supply/demand report released on Tuesday. Judging by the muted reaction, CBOT rice futures had been “pricing-in” the June WASDE for the last 7 weeks.
The new crop September contract has held in a 30-cent trading range most of this week (through Thursday’s close) and is finding resistance just above $12. The life of contract high for the September ’19 contract is $12.35 ½ — made last July.
Given the persistent planting delays this year, USDA broke with the usual protocol of waiting for the NASS Acreage report to adjust plantings. The most surprising example of this was in the 2019 corn balance sheet. USDA cut planted acres by 3 million and reduced the national average yield by 10 bushels per acre.
In similar fashion, USDA made a 20.1-million-cwt cut to new crop long-grain production. Total long-grain production now stands at a projected 139.5-million-cwt. To arrive at this number USDA trimmed harvested acreage by 268,000. This implies that more long-grain production cuts could be seen in the months ahead.
Prevented Planting – How Much Effect?
Since 2007, the largest prevented planting total for rice in Arkansas was 302,684 acres in 2013. In all likelihood this year’s total will be very similar to 2013. Expec more clarity on acreage later this month in the NASS Acreage report, which will be released June 28. Considering that NASS was surveying growers during the first two weeks of June for the acreage report, a completely accurate picture of acreage could be lacking for several more months.
Partially offsetting lower new crop production was a 2-million-cwt. increase in beginning stocks and a 0.5-million-cwt. increase in imports. On the demand side, domestic use was lowered 8million cwt. Projected exports were reduced 2.0 million cwt to 70.0 million.
Reductions in demand generally occur with lower supply and an increasing price outlook. Projected 2019/20 ending stocks were lowered 7.6 million cwt to 30.3 million. The projected 2019/20 long- grain season-average farm price was increased by 50 cents to $10.50/cwt. or $4.73 per bushel.