In step with the other CBOT grains, rice futures turned sharply lower Thursday. News that barge traffic on the Mississippi river could be shut down for a while was largely to blame for the selloff. At one point Thursday July corn was limit down. Corn trade will certainly be most impacted by this event. While originally the Coast Guard did not say when the river would reopen, as of Friday morning it had already reopened for barge traffic.
Thursday’s pullback relieved the technically overbought condition in September rice futures. The market’s push to new highs last week saw the Relative Strength Index (RSI) reach 80.65. For the time being, trading is finding support on the 20-day moving average at $13.685 (red line in chart below). Grain trade is higher Friday morning with corn, soybeans, and wheat all up double digits. Rice futures are up 1 to 3 cents.
At face value, the May WASDE (supply/demand) was neutral for old crop rice and somewhat bearish for new crop. The only adjustment to the old crop balance sheet was in the price outlook. The 20/21 season average price was increased 10 cents per cwt. to $12.60 ($5.67/bu.). This in turn would reduce the projected PLC payment for the 2020 crop by 4 cents to 63 cents per bushel (see bottom of table below).
The initial run of the 21/22 new crop balance sheet could be viewed as slightly more bearish. Record imports of 31 mln. cwt. were projected. However, long-grain production is expected to be down 18.6 mln. cwt. based on the 11% reduction in acres from the March Prospective Plantings survey. It will be interesting to see the NASS June 30 Acreage report.
On lower production and higher prices one generally expects lower usage. Compared to the 2020, USDA projected new crop exports to be down 2 mln. cwt. to 61 million—lowest since 1996. Exports from Thailand, Paraguay, Burma, Cambodia, and Pakistan were all forecast to be higher in the 21/22 marketing year.
Domestic usage is also expected to be down 2 mln. cwt. from last year to 121 million. This would be the second highest domestic usage total historically. Ending stocks are projected to increase 1.3 million to 32.1 million—very similar to 2018. Despite higher ending stocks, average farm prices are expected to remain supported by historically strong grain prices overall. The projected 21/22 long-grain average farm price is expected to be $12.80/cwt. –up 20 cents/cwt. from 20/21.