Rice: Scarce Supplies Create Liquid Cash Market

Rice in first hands is becoming increasingly scarce, resulting in continued quietness in the cash markets across the board. Most likely this inactivity or slowness will continue at some level until new crop arrives. Although there is more cash rice to nab, especially in the Upper Delta region, it appears it will take higher prices than what are currently being offered to do so.

After a couple weeks of softening prices due to a variety of factors, among them the Coronavirus, Asian prices held relatively steady this past week. Vietnam, India, Myanmar, and Pakistan remain the discount sellers at the global level, as both US and Thailand sell at a significant premium to those origins.

Most analysts expect Thai, Pakistan, and US prices to cool down some in the coming months, as new supplies are planted and later harvested. This shouldn’t come as too much of a surprise considering the rally in pricing each of these origins have experienced, even in the last several months.

Export sales surged last week as the USDA reported 136,000 MT for 2019/20, up 78% against the previous week and up substantially from the 4-week average. The bulk of these sales were to Colombia and to Turkey.

Exports were also up significantly (70%) from the previous week and were up 90% against the 4-week average. The primary destinations were Mexico, Haiti, El Salvador, and Canada.

The US market is likely to come under some pressure as Mercosur begins to harvest their new crop. The positive element in this equation is that stocks in both Argentina and Brazil are extremely tight which should keep prices firm despite seasonal tendencies.

It will be important to monitor how aggressive this region targets traditional US markets, namely Central America, in the months ahead.

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The February World Agricultural Supply & Demand Estimate was published this week, which included a few unexpected changes.

First, the USDA added 500,000 cwts to long grain ending stocks despite increasing total use by 1 million cwts. Therefore, the cause for the higher carryout is attributed to the larger quantity of fragrant/aromatic rice types being imported. The USDA also lowered its season average farm price projection by $0.20/cwt, now forecast at $12/cwt.

As for medium grain rice, the USDA surprisingly raised ending stocks for 2019/20. While China’s market share in Puerto Rico has hampered Southern medium grain rice sales, the newfound sales to Turkey and South Korea should be enough to offset that loss.

Most likely the USDA will counter their revisions in futures reports, adding to their current demand estimate as well the improving season average farm price projection.

Full report.




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