With little interest among sellers or buyers to transact, the cash market was left to trend sideways this week. At this point, growers are still fixated on planting and marketers are focused on executing past orders. The USDA posted their first 2021/22 estimates in this month’s WASDE which was generally uneventful. Although the USDA doesn’t publish their acre projection in the May WASDE report, the institution does provide a total production estimate which can then be worked backward.
After doing so, it appears the USDA’s projection is considerably higher than the industry’s 1.85 million-acre figure for long grain. California acres look set to be 400,000 acres or lower this season, marking the lowest output since 1992.
As for use, the USDA lowered its demand estimates for both long grain and medium/short grain rice this year, a typical reaction to lower acreage. Overall, the department expected better pricing for US rice in 2021/22. One factor that is expected to soften the blow on the supply side or even keep a lid on domestic prices, is the infiltration of foreign rice into the US. Rice imports have grown substantially over the past two decades and now rice imports look poised to reach 38 million cwts, the bulk of which are aromatic varieties.
Earlier this week the Mississippi River hit a snag and was forced to close vessel traffic near Memphis due to a crack in the Interstate 40 Bridge that links Tennessee to Arkansas. This caused substantial delays for grain working its way down to NOLA. Fortunately, on Friday, the Tennessee Department of Transportation was able to provide information that eased the Coast Guard’s concern, allowing the agency to reopen the river to all vessel traffic without restrictions.
Soybean shipments are currently slow, unlike corn shipments which have bottlenecked due to this incident. Most are optimistic that the supply chain should be back to its normal state within a week.
In Asia, export prices were mixed this week as Thai 100% B prices ticked upward to $480 FOB while Hom Mali and Basmati prices slipped $20-30 per ton. Vietnam and Myanmar prices held steady as did the prices in the Mercosur region.
Long grain demand improved this week yet remained down just over 8% from last year. Sales to Mexico, Canada, Guatemala, and Saudi Arabia were all integral in supporting higher year-over-year demand this week.
In a surprising turn of events, rough rice futures turned down this past week despite a weakening dollar and a WASDE report that wouldn’t seem to support such action. The nearby contract lost 4% against the previous week and the further out contracts didn’t fare much better. Open interest was up slightly this week, but the average daily volume took a sizable hit and was down 26%.