Thai rice prices have dropped $7 MT this week. In Thailand, the government moved to top rising glutinous rice prices by mandating millers, traders, and exporters immediately report 100% of their rice stocks. Failure to comply will be subject to five years in jail or a fine of 5,000 baht. The penalty for hoarding or gouging is seven years in jail and a fine of 140,000 baht. The current exchange rate is $1 US Dollar equals 30.47 baht.
India prices are higher. This is after they dropped to a seven week low in the last week of August. Kharif acreage has declined 2% from last year. India has had many weather challenges from late and weak monsoons and now floods as the harvest approaches. Bangladesh has also had damaging floods in July and will be importing soon.
US harvest is in full swing. Not hearing anything good out of Louisiana about either yield or milling yields. Mississippi has some good reports on yield and Arkansas is all over the board from OK to poor with a lot of rice to be harvested. MO is just starting with yields from 175 but to 200 bu. Recent price quoted was $5.30 bu in MO. Still many disappointed growers.
USDA reported on Thursday, September 12 and the bottom line is smaller rice crop and 278,000 lower acres. Ending stocks are now estimated off 10 mcwt from last month. I personally believe acres are down 400,000 acres on long grain but at least USDA is moving my direction.
Weekly exports were smaller this week at 46,600 mt. Long grain was 39,900 mt. We like to see 60-70 mt per week. The USDA report overshadowed the Exports report so the market rallied.
The rice futures market is finally reflecting what has been a pretty bad year from start to finish in not only the five US long grain states and also in India and Thailand. It seems that most bullish news in rice has a delayed reaction and August of this year was no exception.
Why did we have a $1.30 cwt drop in August? Because the games that are played between big exporters, big Co-ops and professional short sellers. But now that has run its course and we have lower production, lower ending stocking, not just in USA, but also most other major producing countries.
US Exports have been good for the past two months and I think will remain good for the next two months. So I should be very bullish on Nov Futures but right now I am selling some rice.
Long term we are going higher but right now Nov futures are overbought and I know the “manipulators” will be back to play. So don’t be surprised to see a correction this month. Remember, we do not get estimated abandoned acres until the January USDA Report. We may have to wait until then to see the ultimate high in rice. By then we will be trading the March Futures contract.
Be careful during harvest and pray for a better year in 2020.
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.