Rice Market Update: Trending to the Upside

©Debra L Ferguson Stock Photography

With the dawn of a new decade, the rice market has begun to celebrate the new year with a distinct bullish tone as fundamentals in the market begin to coalesce into a discernable direction. The export sales report for the week was delayed due to the pending weather system preparing to impact the Northeast but the previous several reports noted a surge in export values over the holidays.

Last week’s sales values indicate a decrease from year-end sales and this number will probably be reflected in the delayed report given the slow start to the year. It can be expected that larger sales tonnage will be reported in subsequent reports as overseas buyers begin to refill the inventories following the holidays.

Vessel loadings have experienced a similar trend and have analogues expectations in the future. The world market price has appreciated since the previous report by several increments and this will likely persist over the short term as well.

In Asian pricing, the benchmark origins have all seen notable appreciation in market price. The exchange rates have not significantly changed over the course of the holidays, so these indicators are being influenced by external fundamental forces at this time. With the pending new year in China on the horizon, the impacts may be muted for a time, but the trend is to the upside at this juncture.

Domestic cash prices have begun to respond as well as the new year dawns. These price increases are largely due to the poorer milling quality being noted across the long grain production regions which are causing stockpiles to be consumed at an accelerated rate to produce the same milling outturns. With total volume decreasing rapidly, the supply and demand equation are adjusting to reflect new market conditions.

Continued export demand has also been beneficial from the producer standpoint as it has helped to keep other market avenues open. The futures market has generally increased over the past week also with a few contracts showing negative returns under last week’s trading. Net gains/losses ranged from -0.19% to 0.41 respectively with the more significant gains being posted in the nearby contracts.

Volume and open interest have been higher than normal and notably, have also been present on some of the deferred contracts.

This week will see the first WASDE of the year released. This report generally incorporates many of the year end totals accumulated since the December release and can be expected to have some notable changes in it. The market and the trade expect this to be a net bullish report given the fundamental factors in play but as with all reports it can be dangerous to speculate.

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