Rice Market Update: Conditions Full of Unclear Factors

    ©Debra L Ferguson Stock Photography

    Harvest is rounding out well, as all eyes are now turning to the demand situation for a high-yielding crop. While Haiti is the usual suspect to fill out milled rice demand, the loss experienced by the US industry this year is becoming tangible. Louisiana, for example, has had a significant erosion of the historically consistent Haitian business.

    Even if the rice does make it to the port, it becomes a target for local gangs and/or militias and doesn’t make it to its destination. This uncertainty pervades the market, and despite NGO’s doing their best, with no coherent logistical system inside the country, exporting rice is increasingly difficult. This is a dynamic situation with significant efforts being made to continue to source US rice into this country.

    The USDA released its World Agricultural Supply and Demand Estimates report this week, and they are projecting reduced supplies, decreased domestic use, unchanged exports, and reduced ending stocks.

    The expectations for great yields in the long grain market were confirmed this week as well, as NASS increased the average yield by two pounds per acre, up to 7,625. As discussed previously, the lower milling yields are acting as a counterbalance to pricing pressure that may result from the bump in yields.

    There is also an expectation that imports will decrease by 2 million cwt, down to 36 million cwt, on account of higher freight costs and port delays—simply a function of the clogged supply chain.

    With the White House, leading retailers, and port authorities finally huddling to come up with solutions, there is hope for some form of progress in the coming days, albeit Q1 of 2022 is still the earliest anyone is expecting to see any form of relief.

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    So many influencing factors are contributing to market conditions few have witnessed, if ever. Production, weather issues, freight, logistics, labor shortage, impacts of COVID-19, damage from hurricanes and other factors are all colliding.

    If you have not, farmers are encouraged to contact their fertilizer suppliers to secure product for the 2022 crop. Comments in the Delta are that if there is a lack of available urea, farmers will have a tendency to shift acres more into soybeans from rice.

    The global outlook calls for increased rice consumption along with increased supplies and trade. The ultimate effect is higher ending stocks, with supplies up by 2 MMT to 695.9 million. This is on account of India’s third record crop that they can’t seem to liquidate fast enough.

    We have mentioned that their export numbers have eclipsed Thai and Viet numbers, and the expectation is that will continue to be the case until some form of agricultural controls imposed by the government will slow the production of rice, or encourage some other crop to be planted. Global ending stocks bumped 1.8 MMT to 183.6 MMT, largely a result of China (61% of world stocks) and India (19% of world stocks).

    In Asia, markets have held steady and look firm moving into the week ahead. Prices are largely unchanged in Thailand, Vietnam, and India with reports remaining at $385/pmt, $435/pmt, and $355/pmt respectively. The situation in Vietnam is going to be driven by the reopening of ports more than the supply of rice at this point; and they will be able to ship rice at these prices as quickly as the system will allow.

    Thai exports are struggling to pull west African business away from the cheaper Indian rice, where overall exports have just crossed 3 MMT for the year, directly on pace with last year.

    The futures market got a boost this week with a tighter balance sheet signaling future reports will follow suit. This coupled with low milling yields could result in a bullish sentiment for the futures market.

    Full report.




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