In the US, the news of the Iraq business keeps getting better. The original report of 60,000 metric tons was bumped to 80,000 metric tons, and now it appears that an additional 40,000 metric tons may have been sold, totaling 120,000 metric tons.
There was a recent MOU signed between the US and Iraq that asks for 200,000 metric tons annually for US rice, so this is a welcomed purchase after a two-year drought. This is the only bright spot for the milled rice market, and this business materialized not a moment too soon.
It is paramount in helping offset the lost business from Haiti as a result of the assassination and political confusion in that country. Haiti has become the most steady milled rice market for the US as of late, but with their focus turned inward, they are unable to coordinate their rice purchases with success.
This leaves the milling capacity wide open for Iraq in what all hope to be a solid relationship moving forward.
Prices in Asia have all converged at $385-$390 mt for Thai, Viet, and Indian rice. There has been speculation that Indian rice may cheapen further, but that has not materialized. This leaves large buyers like the Philippines and West Africa to choose their origin, as opposed to looking to India first simply because it’s been the cheapest. Now, more than ever, freight and logistic costs are coming into play though, as the COVID-19 log-jam continues to plague rice shipments on account of delays and soaring costs.
In South America, Argentina is experiencing a drought and has called a 180-day emergency on the Rio Parana. The exact implications are unknown at this point in time, but will no doubt create supply shortages that will ripple through the pricing equation in the coming months. Uruguay, like the US, is busy loading a vessel to Iraq.
On the ground in the US, Texas and Louisiana are in the early stages of harvest. Louisiana is proving difficult because of the wet weather and green rice, but this is typical for this time of year and looks to be improving shortly. The early reports from Texas are indicating a bit of smut, with potential rain in the forecast in the next 10 days.
Rice News on AgFax
Arkansas expects to start harvest in September, as does Mississippi, with little to report until cutting begins. Reports of insect pressure especially armyworms in the delta are becoming more frequent.
New crop prices are edging up with paddy indications of $342-$345 FOB Gulf ports. Demand in Venezuela appears to be increasing among other buyers in both Mexico and Central America.
USDA weekly export sales report shows 10,700 metric tons of exports, with Mexico, Canada, Jordan, and Belgium being the destination. The new marketing year number boasts the 80,000 metric ton sale to Iraq, along with smaller shipments to Guatemala and Honduras, 7,500 tons and 4,000 tons respectively. Exports totaled 54,300 metric tons, down 32%. Japan was the lion’s share of this report with 40,000 tons of medium grain from CA.
Futures bumped slightly this week on account of the Iraq sale, but not enough to significantly move the needle because of the large carryover still weighing on the market—especially with a new crop just around the corner. Contracts traded at a low of $13.29 pre-Iraq announcement but bumped to $13.685 with the news. The average daily volume is 1,620, with open interest at 1,631.