Rice Market: Futures Jump on Bullish WASDE

Rice harvest. ©Debra L Ferguson Stock Photography

Once again, cash prices were largely unchanged this week, with only a small bump in Texas cash prices. Futures gained against last week for the second consecutive week on information released in this month’s WASDE report.

Given the bullish revisions in the September WASDE report, the jump in futures pricing didn’t surprise anyone. The USDA lowered the 2019/20 carry in by 1 million cwts and cut 22 million cwts from their previous production estimates. Even with “rationing” demand—lowering both export and domestic use, the ending stock forecast fell by nearly 10 million cwts from last month’s projection.

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Coincidentally, the season average farm prices for long grain were raised $1 per cwt, which is uncommon to see at this time of year. The report also contained some excitement for the U.S. medium and short grain rice complex, as the USDA drastically lowered their carry in estimate by more than 34% against last month. The latest projection for 2019/20 carry in is 10.2 million cwts. Meanwhile, the USDA increased production by 4.4 million cwts.

This action isn’t too alarming since it was widely known that the USDA was underestimating the size of the California crop, which is now believed to be just under 500,000 acres. Despite adding stocks to this month’s report, the USDA still raised the season average prices to $16.60 per cwt, up $0.70 per cwt from August.

The U.S. rice harvest, primarily long grain fell further behind the 5-year average pace this week. Aggregating the states, rice harvest is roughly 30% complete, compared to the 37% 5-year average. Yields in Arkansas are improving as harvest proceeds, however, yields and Texas are reported to be below average.

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