It has been a rough week in the rice industry with all eyes on Hurricane Laura as it plows through the majority of the long grain rice production and halts trading until the damage can be assessed.
In the export world, reported sales for the week were notably increased over the week prior and are getting back to “normal” levels that have not been seen since the early spring. Continued export sales volume will be integral in keeping the current estimated crop at manageable levels. Vessel loadings also showed a strong improvement since the previous report.
In other parts of the export world, benchmark Asian pricing has appreciated as well. Some of this is due to exchange rate changes, while the balance is related to the underlying market fundamentals. A tightening supply side equation seems to be largely responsible in that area.
USDA seems to have accepted this as well and has raised its world market price estimate for both long and medium/short grain classes as a result.
In the domestic cash markets, very little has happened from a pricing standpoint as the focus has been on Hurricane Laura this week. This cyclone has significantly impacted the Gulf Coast of Louisiana and East Texas with devastating winds and flash flooding. Its current track puts it on course to impact most of the remaining long grain acres in the United States.
With the yield and quality situation in those areas still unknown, this storm could have a very long-term impact on the marketing year. As a result, cash trading has been limited at best as buyers and sellers across the rice growing region have been focused on surviving the hurricane.
Rice News on AgFax
From a production standpoint, the Texas and Louisiana harvest is nearing its conclusion (prior to the storm) and Mississippi is projected to start up in the next week or two. The Upper Delta will progress into harvest within the next 2-4 weeks, depending on the impacts of the storm. Needless to say, Laura is particularly poorly timed for the rice industry.
The futures market over the week has made significant gains over last week’s trading. This week saw the open contracts on the board appreciate by 0.89% – 2.5%, largely on weather related concerns. This occurred on a higher daily volume, although open interest was slightly lower than at this point last week.
The next few days will reveal a lot as to what trials the rice industry will face over the coming months. The impacts of Laura cannot be overstated at this time. Not only has the crop itself been negatively impacted but the effects on infrastructure will be long term.