Rice Market Update: Growers Focused on New Crop

Rice field pre-flood. ©Debra L Ferguson

It has been another very quiet week in the rice industry with very little movement in any sector and virtually no domestic rice left to sell along the U.S. Gulf Coast. The export sales for the week has been delayed due to Monday’s Presidents Day holiday and will be released on Friday as a result.

It is expected that the sales numbers will be decreased from last week’s volume of 136,000 MT as buyers are now trying to ship and receive the volume already purchased on the books. Vessel loadings will likely decrease somewhat as well, although not to the same magnitude as that of sales.

The world market price for the week was increased from last week’s pricing for both classes. This adjustment is largely a reflection of changing global dynamics, specifically the impacts of weather in Southeast Asia, supply in the Western Hemisphere, and the implications that coronavirus is having on global trade.

Asian benchmark origins were higher this week over the previous reports. Stronger fundamentals in that region seem to be the driving forces at this time.

Domestically, it has been very quiet. The last remaining lots along the Gulf Coast have been liquidated at this point and with nothing left to sell, it is hard to pinpoint a market price. Mississippi is reportedly getting closer to the end of their inventories as well. While there is still rice to be had in the Upper Delta, it is becoming increasingly price sensitive.

Growers are becoming more focused on new crop fundamentals and what this will do to the market. It is widely expected that rice acreage will be up as compared to last year and the impacts on prices are of concern. With very few options to forward contract or price the new crop production, farmers are watching the market very closely as final planting intentions are being made.

Futures market action for the week was consistent with what has been noted over the past few reports: stronger pricing in the old crop contracts with softer pricing in the new crop months. Old crop contracts posted gains ranging from 0.52%-0.97% over last week’s values while new crop noted losses consistently near to 0.4%.

Both average daily volume and open interest were higher as compared to last week’s session indicating more liquidity in the marketplace.

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