Rice Market: Corn, Soy Strength Provide Spillover Support

    September rice futures continued higher this week along with the rest of the CBOT grains.  The graphs below illustrate the price trends for the major grains since March 30, 2021.  New crop corn, wheat, and soybeans have all added over $1/bu following the NASS Prospective Plantings report released on March 31.

    Recall the findings from the survey resulted in limit moves higher in corn and soybeans.  Corn futures have caught fire this month as estimates of Brazil’s production continue to fall.  From a relative price standpoint, soybeans are losing the acreage battle to corn.

    For some historical perspective, September corn and November soybeans are now trading at the highest levels since 2013.  USDA’s current projections for 20/21 corn and soybean ending stocks are also the lowest since 2013.

    Focusing on rice, Thursday’s Export Sales had some positives.  Long-grain rough rice sales for the week of April 15 were the highest since late January at 79,661 MT.  Mexico and Venezuela were the top buyers taking 83% of total sales for the week.  Rough rice shipments were the highest since December 10th at 58,123 MT.

    Venezuela was the top destination with 95% of the weekly total.  Long-grain rough rice sales are 8% ahead of last year.  Long-grain milled rice sales continue to lag 30% behind last year.

    In the cash rice market as of Thursday’s close, fall delivery bids to driers were in the range of $5.84 to $5.90 per bushel.  Basis is 16 to 23 cents under September futures.  At mills, new crop bids were inching closer to $6 ($5.97) with basis 9 cents under September futures.

    Strength in corn, soybeans, and wheat provided spillover support to rice this week.  Another supportive factor for grains is the US Dollar weakness.  It has been locked in a downtrend for the entire month of April.

    Rice News on AgFax

    From a technical perspective, Thursday’s 24 cent trading range in September rice took prices through some key resistance (the Oct. 2015 highs at $13.28).  Daily trading volume was strong as well on Thursday and open interest increased.  A signal that new longs entered the market.

    To wrap up, the chart below is a 10-year monthly continuation of the September rice futures contract.  With the contract now trading at multi-year highs, some long-term perspective may be helpful in determining future price objectives.  Beyond the October 2015 highs surpassed this week, the next layer of chart resistance may be at $13.70 ¾.

    This price level is a 50% retracement of the move from the September 2011 high of $18.25 ½ to the August 2016 low of $9.16.  Further upside in the rice market could be largely driven by the rest of the CBOT grain complex.  On its own, September rice is technically overbought (RSI: 75.70) and fairly significant strides were made this week in planting.  The market may relax a bit in the week ahead.

    CBOT Futures Rice Soybean

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    CBOT Futures Wheat Corn

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    CBOT Sept Rough Rice Monthly

    CBOT September Rough Rice, Monthly Continuation. Click Image to Enlarge

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