Rice Market: Harvest Full Speed Ahead, Little New Crop Yet to Trade

©Debra L Ferguson Stock Photography

It has been another hot week in the rice world as harvest continues apace in the South along the Gulf Coast with portions of the Mississippi crop preparing to begin harvest over the next week. The market itself has been fairly stable since the previous report with only minor adjustments in most of the standard market indicators over that time.

In the export sales report, total sales were off as compared to last week. This is not particularly surprising given that new crop has yet to materialize on the market and there is no significant volume available at this time. Realistically, this will likely persist into September as the first lots of new crop are dried and ready to trade.

What this means for the sales is that the hand-to-mouth buying will probably continue for another few weeks.

Vessel loadings were up notable over last week’s tonnage, but this is largely reflexive of the stronger sales noted in last week’s report. Nonetheless, a strong export market is vital for the success of the U.S. rice industry.

Asian prices are generally sideways for the week, with the exception being Thai 100%B. This benchmark has gained significantly in price largely on regional fundamental forces. Given the size and scope of the Thai influence on the rice exports, it can reasonably be expected that other Asian benchmark prices will appreciate in the coming weeks as well.

USDA lowered its world market price estimate over last week’s values. This would seem to be in response to the WASDE data and report that was issued earlier this week, as well as the confluence of international economic, monetary, and fundamental factors.

In the domestic market, prices have remained generally unchanged. As has been mentioned, there is still very little of new crop yet to trade and none of the buyers are making any major overtures at taking a position at this time. Quality reports have continued to indicate the presence of smut, especially in conventional varieties along the Gulf Coast, but the magnitude of the problem appears to be less than early estimates suggested. Milling yields are reported to be good at this time.

The futures market was mixed over the week with the nearby contracts posting minor losses while the deferred contracts realized modest gains. The market traded on significantly lower average daily volume and modestly lower open interest.

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Earlier this week, USDA released its WASDE report that was fairly benign to the rice market (unlike its brethren corn and soybeans). It is important to note that this is the first survey based WASDE that has been released. The previous method was to use mathematical estimates.

The supply side revisions in this installment included a reduction in total supply as a result of lower beginning stocks and lower yields. Total production was reduced by 3.3 million hundredweights as a result of a reduced yield projection by 121 pounds per acre.

The demand side saw domestic use reduced by 1 million hundredweights with no change in exports. The net impact of both the supply and demand side adjustments was a decrease in ending stocks by 3.3 million hundredweights to 47.2 million hundredweights.

This had the effect of raising the season average farm price by $0.40 to $12.20 for the year.

Full report.

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