Rice Market Update: Weather Continues to Dominate Harvest News

©Debra L Ferguson Stock Photography

Not surprisingly, the big story this week was the path left by Hurricane Laura as it roared through Louisiana and the Delta. This category 4 Atlantic hurricane was one of the strongest on record and it mainly brought damage on the Louisiana rice industry, however, its impacts were also felt in Arkansas and parts of Mississippi.

As a result of the storm, harvest was brought to a standstill in these states as growers, warehouses and mills sought to fortify and preserve what they could. At the same time, the already slow market came to a halt as traders looked to analyze the damage done to both supplies and to infrastructure.

For example, the Port of Lake Charles’ capacity to export grain will be limited at best over the next few weeks as the port attempts to quickly repair all the damages.

With all of the havoc, bids were scarce and when they surfaced, prices generally sideways and didn’t garner any real interest from sellers. Until electricity and communication services are fully restored the market will continue in a holding pattern.

The delta continued to be hampered with showers this week that were not as a result of “Laura”.

As for the harvest metrics, the USDA reported that California, Texas and Louisiana to be 100% headed, and Arkansas to be 95% headed (5% behind the 5-year average). Mississippi and Missouri are tracking their 5-year averages relatively close. The greater concern in Arkansas relates to harvest delays.

Already being 9% behind the 5-year average before Hurricane Laura inundated the rice crop, most growers becoming increasingly anxious over the additional delays. As a result of the heavy rains, there have been numerous reports of rice falling; down rice will only add to the setback by causing harvesters to move much slower through the fields as they attempt to pick up the rice.

In Texas, the throttle is wide opened as growers make speedy progress with harvest; the first crop is expected to be mostly finished by next week and the hopes are high for a good ratoon crop.

Rice News on AgFax

High paddy prices in Brazil as indicated in the CEPEA chart below, due to a year of low production and complications from the COVID-19 have mills and traders looking to the U.S. for rough rice. Negotiations are on-going and we believe somewhere between 150,000 and 300,000 tons of US paddy will find its way to Brazilian rice mills.

Like the U.S., the Mercosur markets have been turned upside down largely by the virus and production issues.

In Asia, demand for Thai rice remained flat causing exporters to lower their prices in an effort to drum up more business. The current price divergence between Thailand and other exporting origins in Asia suggests that Thai prices may drift a little lower in the weeks ahead.

Although Vietnam’s prices were resilient this week despite a slowing demand, the price support seems to be more justified by a waning supply than demand strength.

Meanwhile, India and Bangladesh continue to battle severe flooding. A recent article cited one-third of Bangladesh to be under water and it is reported that more than $4.29 billion worth of rice has been destroyed. Considering that Bangladesh rice imports range from 1.49 million metric tons to as low as 100,000 metric tons, the impact that this flooding could have on the global rice market can’t be overlooked.

At first the futures market appeared relatively unresponsive to Hurricane Laura, but over the past few days it seems to be responding more appropriately as open interest improved despite volume falling to levels not seen since July. Volume seems to have rounded a corner and is looking to grow.

Meanwhile, the nearby contract moved down $12.45 per cwt after spiking to $12.62 just a few days ago. Once more of the crop damage and harvest delays are better sorted out, the market may seek to push higher.

Full report.

The Latest

Send press releases to Ernst@Agfax.com.

View All Events

Send press releases to Ernst@Agfax.com.

View All Events