Dossett on Rice: Price in No Man’s Land, Hoping for Higher

Rice being harvested in Prairie County, Arkansas. Photo: Fred Miller, University of Arkansas

CASH MARKET

Thai rice prices are steady to lower. Thai rice exporters have thrown full support behind a ban on Paraquat, Glyphosate and Chlorpyrifos. They feel that global rice consumption is moving to chemical free products. The Thai Minister of Commerce is in the USA to meet with US importers. Thailand currently exports 500,000 tons mostly of jasmine rice to the USA each year.

Northwest Thailand has had both droughts and flooding – funny combination. There is also a major blast problem. The strong Baht also has slowed exports. India prices remain steady.

US export sales picked up a little in report on November 15. Net sales were 61,200 mt to Mexico, Haiti, Nicaragua, Saudi Arabia, and Japan. Shipments were 48,500 to Costa Rico, El Salvador, Guatemala, Canada, and Mexico.

I would like to see us return to the 90,000 tons level on exports we saw for many weeks in the last three months. China was a player last week in soybeans, cotton, beef and pork. It sure would be great if we could book some rice sales to them.

We continue to ship receipts from registered warehouses. We lost 13 contracts at Otwell, the largest inventory with 389 and we lost 36 at McGehee, down to 92. Total registered receipts are down to 566 as of Friday, November 15.

Not hearing any major changes in USA cash bids. We are hearing solid to poor yields and milling yields out of Arkansas. Brazil has gotten its first good rain in many weeks, but the weatherman calls for drying out next week. Pakistan and northwest India will receive additional unwanted rain during the next three days.

Big news this week was the release of Prevent Plan acres. According to FSA, we had 751,578 PP acres in rice, corn was increased to 11.43 million acres, and soybeans upped to 4.46 million acres.

FUTURES MARKET

January rice futures are still trying to decide which way to break out of the Triangle that started building in July 2019. Last 3 days have seen a move to the downside. We bounced off $11.715 cwt on Friday morning. This is a very significant action because that was the lower end of the triangle.

Rice News on AgFax


January futures closed at $11.89. This indicates a washout of the weak longs and a great buying opportunity for the bulls.

The stochastic indicator is in No Man’s Land, so this market can go either way, but our bet is on higher. Our thinking is that we have a much smaller US crop and a much smaller 2nd US crop.

Weather challenges in South American and Asian countries and potential for increased demand. That leaves me looking UP!

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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