First Rough Rice Export of 2020
With the 2020 rice harvest in full swing, Southwest Louisiana farmers wasted no time in loading the first vessel of rough rice in the Port of Lake Charles for shipment to Honduras.
Efforts of the South Louisiana Rail Facility (SLRF) and their farmer members have resulted in the development of strong relations with numerous buyers in the most important markets for U.S. rice in Central America and Mexico. The sale is a result of coordinating market development activities with the US Rice Producers Association.
Scheduled to depart Lake Charles this weekend, the “UBC Sydney” will be loaded with 22,000 tons of paddy rice out of Southwest Louisiana and Southeast Texas. More than 40 farmers sold rice for this shipment.
“These shipments support prices for farmers all along the gulf coast, giving farmers an important alternative,” according to Dwight Roberts, President & CEO for the USRPA, adding “the recent announcement by the SLRF to build a new rice mill in partnership with Agreeta Farmer Network further enhances the ability of rice farmers to market their crop.”
Little Change in USDA’s WASDE Report
Harvest remains underway in the lower delta as on-the-ground reports suggest that Louisiana is nearing the 50% completion marker, and Texas is fast approaching two-thirds. Milling yields are looking good so far in both of these states, despite a little bit of chalk surfacing in Louisiana.
Rice News on AgFax
It should be noted that the chalk only affects the appearance and that there are no reports of it impacting the taste or the cooking characteristics. Arkansas is still believed to be a couple weeks away from really ramping up while Missouri and Mississippi are expected to begin cutting rice in the first and second week of September.
The rough rice cash market ticked slightly downward this week as most of the industry continues to prepare for a larger crop. To reiterate what was stated in previous reports, the USDA June acreage report has US long grain acres up 24% year over year which translates to an additional 426,000 acres or about 31 million cwts of increased production (assuming average yield of 73 cwts per acre).
The carryout is projected to be down 18 million cwts against last year, thereby providing some price support moving into the new marketing year. However, the additional 31 million cwts of new crop production will more than offset that component and should setup supplies to mirror that of 2018/19.
This means that demand which appears to be a little slow to materialize will be essential in maintaining or improving upon current cash prices.
Earlier this week the USDA also published its August WASDE report which only included minimal changes against the July report. Of note, the carryout figure was left unchanged, but production was lowered 1.7 million cwts—most likely the result of a yield adjustment.
Domestic use was also left unchanged, which is encouraging considering the slower than normal start to the marketing year. Export use was lowered by 1 million cwts to the surprise of many in the trade.
Market comments are indicating Brazil is oversold and is showing interest in U.S. paddy. After strong sales to Mexico, Central America and traditional customers the Mercosur mills are addressing domestic demand with remaining stocks. Spring planting has begun in Paraguay and dry conditions throughout the Mercosur region is a concern to farmers.
“Reservoirs are low and if we don’t get the needed rains in September and early October then we will be forced to cut back on acres, shift some to grain sorghum”, said one Argentine farmer.
Should it come to fruition, this scenario could bode well for US long grain demand. Ultimately the changes in this month’s WASDE resulted in 2020/21 ending stocks being revised downward 700,000 cwts from last month.
As for Asia, a recent report stated that the Philippine’s production is poised to rally 6-8% from 2019, alleviating some of the import pressure the island nation normally experiences. The expectation of tighter stocks in Vietnam has created an unusual price divergence in the region.
Over the past 8-weeks, Viet 5% prices have surged 10% despite other providers such as Pakistan, Thailand and Myanmar being flat to even down over the same time period. It now sounds like those that were short are now covered, and with the added production in the Philippine’s, consensus among the trade points to Vietnam’s prices balancing back out in the weeks ahead.
The futures market was once again a bit unremarkable this week and is likely to remain in that state until a buyer develops a position and creates more activity.
The nearby contract traded within a $0.30 per cwt range over the past 7-days with a low of $11.48 and a high of $11.78 per cwt. The average volume was down 45% against last week, however the open interest was relatively flat.