Cash prices traded sideways this week, despite the two significant USDA reports that were published. Earlier this week, the USDA released both the June Acre report and the June Stocks which reflected rice in all positions as of June 1st.
Although it is a fairly rare occurrence that the USDA and the trade both agree on numbers at the time of year, that does appear to the be case for now, as the USDA lowered their acreage expectations significantly and reported higher stocks.
The lackluster response in the futures market wasn’t too surprising as dismal demand has weighed on the market for several months. The latest export sales report has long grain demand down more 3% year over year. Milled rice sales abroad have struggled to reach competitive pricing which has ultimately resulted in weaker demand out of Central America and parts of Africa and the Middle East.
Rice stocks were up 35% from last June with Arkansas accounting for most of the increase. Rough rice in all positions in Arkansas was up nearly 12 million cwts against last June, Louisiana was up about 1 million cwts and California stocks increased by 2 million cwts.
In general, the additional stocks in each of these rice-growing states are well received by the industry, especially in Arkansas and California where output is expected to be sharply down from last year. In the June Acre report, Arkansas’s planted area was down 16% from 2020, or 215,000 acres.
Rice News on AgFax
Collectively, Southern long-grain acres were estimated to be down 261,000 in 2021, which most of the industry still expect to be a best-case scenario. Given the crop damage and some last-minute decisions to plant a different crop, it’s probable that harvested area will end a bit lower than the current estimates.
In Asia, most exporters reported lower prices again this week as import demand waffles. Freight rates have doubled since last year, driving India’s prices to lows not seen since November 2020. The story is even worse for Thailand where prices are sinking to their lowest levels in over 17 months.
Futures are relatively stagnant, even after digesting the latest reports. In fact, after last week’s short rally, most contracts are trading slightly lower this week. Lower prices, lower open interest, and lower volume suggests the market may move lower yet.