Arkansas Rice: Supply/Demand Report Mostly Bearish

©Debra L Ferguson Stock Images

The September supply/demand report was not friendly to the rice market. For starters, USDA made some bearish adjustments to the old crop (2019/20) balance sheet. Imports were increased by .3 mln. cwt. Domestic use and exports were both lowered by 2.1 and .4 mln. cwt., respectively. As a result, old crop ending stocks increased by 2.7 to a total of 16.9 mln cwt.

U.S. Long-Grain Supply and Demand
unit 2019/20 2020/21 2020/21 Change
million cwt.   August Sept. August to Sept.
Beginning Stocks 32.6 14.2 16.9 +2.7
Production 125.6 159.1 168.9 +9.8
Imports 29.8 29.0 29.0
Total Supply 188.0 202.3 214.8 +12.5
         
Domestic Use 106.4 109.0 111.0 +2
Exports 64.6 69.0 71.0 +2
Total Usage 171.1 178.0 182.0 +4
         
Ending Stocks 16.9 24.3 32.8 +8.5
Farm Price ($/bu.) $5.40 $5.22 $5.09 -.13
Source:  USDA WAOB, September 2020.

On the new crop balance sheet, along with the 2.7 million increase in beginning stocks, long-grain production  was  increased  by  9.8  million  cwt.  to

168.9 million. That would be the largest long-grain production since 2010 (183.3 million cwt.). USDA did lower yields this month in some key long-grain states. Arkansas’ state average yield was lowered 50 pounds/acre to 7500. Louisiana was lowered 350 pounds and Texas 300 pounds. No yield changes were   made   to   Missouri   and   Mississippi.

The production increase comes from the fact that USDA has found another 150,000 acres of long-grain since the June Acreage report was released–85,000 more in Arkansas and 66,000 more in Louisiana, Mississippi, and Missouri combined. The June Acreage report pegged long-grain harvested acreage at 2.156 million. USDA’s September estimate is now 2.306 million.

Increases in demand this month offset almost a third of the total supply increase. Domestic use was increased by 2 million to a record 111 million cwt. Exports were also increased by 2 million cwt. Total demand at 182 million cwt. would be the highest since 2010.

Projected 20/21 ending stocks were increased to 32.8 million cwt., up 8.5 million from last month and the highest since 2010’s 35.6 million cwt. The 2020/21 season-average farm price was lowered 30 cents to $11.30 per cwt ($5.09 per bushel).

The sharp increase in new crop production and ending stocks turned November ‘20 futures 35 cents lower at midday Friday. The technical (chart) picture turned negative with trading slipping out of the up- trending channel that has been in place since late July. Initial support for the November contract is being found near $12.10 or the 38% retracement of the monthlong July 28th  to August 28th uptrend.

Revenue Protection (RP) Harvest Price

The price discovery period for the Revenue Protection (RP) “harvest price” is currently underway. The “harvest price” is determined by averaging the daily closing price of the November rough rice futures contract for the entire month of September. The final “harvest price” will be announced in early October. As of September 10th, the average “harvest price” is $12.38/cwt. ($5.57/bu.). 

Revenue Protection (RP) Harvest Price Calculation, Long-Grain Rice.

Date November Rolling Average
  Futures Price Price
  ($/cwt.)  
9-1-20 $12.230 $12.23
9-2-20 $12.285 $12.26
9-3-20 $12.345 $12.29
9-4-20 $12.400 $12.32
9-8-20 $12.455 $12.34
9-9-20 $12.440 $12.36
9-10-20 $12.480 $12.38
Base Contract: CBOT November Rice 2020.

 

Price Loss Coverage (PLC) Payments:

The tables below include the season average farm prices and projected PLC payment rates per bushel for 2019 and 2020. The 2019 long-grain average farm price was unchanged this month at $5.40 per bushel. The southern medium-grain average price was lowered 5 cents per bushel to $5.22.

2019 Projected PLC Payment Rates, Rice 

   

A

 

B

 

C

(A minus higher of B or C)
Unit:

$/bu.

Reference Price Loan Rate Mktg.Year Avg. Price Proj. PLC Pmt. Rate
Long- Grain $6.30 $2.925 $5.40 $.90
Med.- Grain $6.30 $2.925 $5.22 $1.08
Source:  USDA, September 2020.

The final 2019 marketing year prices and PLC payment rates for rice are expected to be released October 30, 2020. As a reminder, for ARC and PLC payments a sequestration percentage will be applied to the payment rate. In recent years the sequestration reduction has been in the range of 6.2 to 6.6 percent. The 2020 crop year farm prices were reduced this month to $5.09 per bushel for long-grain and $5.13 per bushel for southern medium-grain. The projected 2020  PLC  payment  rates  are  shown  in  the  table below.

2020 Projected PLC Payment Rates, Rice

   

A

 

B

 

C

(A minus higher of B or C)
Unit:

$/bu.

Reference Price Loan Rate Mktg.Year Avg. Price Proj. PLC Pmt. Rate
Long- Grain $6.30 $2.925 $5.09 $1.21
Med.- Grain $6.30 $2.925 $5.13 $1.17
Source:  USDA, September 2020.

Projected PLC payment rates are updated monthly on the USDA Farm Service Agencies’ ARC/PLC website at this link: ARC/PLC Program Data




The Latest


Send press releases to Ernst@Agfax.com.

View All Events


Send press releases to Ernst@Agfax.com.

View All Events