Rice Market Update: Export Sales, Shipments Highest in 4 Weeks

    Rice harvest. Photo: University of Arkansas

    The harvest in Arkansas has rounded its final turn and is all but over the finish line. With less than 10% of the crop to go, the story hasn’t changed much from the beginning. Yields are high, quality is down, and the 15% reduction predicted from the outset looks to be pretty accurate.

    In fact, the October Rice Outlook pegs the reduction at just over 16% smaller than last year at 190.5 million cwt. There are reports of damaged rice on barges that were set for the Iraqi vessel, and despite the problems, the vessel has sailed.

    That being said, the hope to garner more milled rice business from Iraq is fading, as Iraq has found a supplier in Thailand for its long grain needs in the near term. There is a possibility that business may return in the first half of 2022, but until then, the milled rice business will look to Haiti and the domestic market.

    The rain has finally found California, and the forecast in the West shows cloudy skies and rain throughout the week. The USDA has increased California’s yield expectation up to 8,900 pounds per acre and is actually low according to industry. Yields like this would approach record levels and be very helpful in offsetting the lost acres due to drought.

    Containers remain an obstacle in the Port of Oakland, which is where the majority of California’s medium grain exports go. Prices are firm as harvest hits completion and the rain arrives.

    In Asia, prices haven’t changed since last week, and the market is firm. The undertone doesn’t show much weakening, as Viet prices well exceed Thai prices now, at $435/MT and $390/MT, respectively. India continues to push the envelope with loadings as they liquidate their third record crop in a row at prices around $360/MT.

    A recent GAIN report on China reveals that India is now the top supplier to China, though nearly all of the product, 97% of it, is broken rice. This is indicative of China’s need for animal feed, and cheap brokens from India fits the bill perfectly.

    Officially, data shows that China’s largest import year was in 2017 in the amount of 3.99 MMT. So far in 2021, China has imported 3.2 MMT, or nearly 400 TMT per month. This puts them on pace for 4.8+ MMT by December.

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    On the other side of the coin, Chinese exports have slowed by over 15% since last year, largely on account to losing customers to India because of their more competitive prices. Therefore, China is not only buying more Indian rice (brokens) as a substitute for corn in their feedstock, but not able to export their higher-priced rice because India is capturing their customers too.

    Reports show that Chinese domestic prices are responding and are falling off, but it will take a significant event to compete with India’s third record crop in three years.

    Export Sales this week show net sales of 81,400 MT, up 54% from the four week average. Mexico procured 47,800 MT, Honduras (17,100 MT), El Salvador (9,000 MT), with smaller amounts from Jordan and Canada. Exports of (68,100 MT) were up noticeably from last week, and 79% over the four-week average. This is a result of shipments to Iraq (32,900 MT), Haiti (25,600 MT), Canada (4,000MT) Mexico (3,100 MT) and Jordan (1,000 MT).

    The 54% increase in export sales from the four-week average is welcomed news to farmers, particularly a needed sale to Haiti of 25,600 metric tons. The unstable political chaos has brought security issues and a decrease in Louisiana rice exports especially during the past three months.

    The instability threatens Louisiana’s largest market.  According to Supreme Rice Mill, one out of every three grains of rice produced in Louisiana is exported to Haiti. The successful efforts of the South Louisiana Rail Facility have been vital for Louisiana rice farmers, thanks to the 200,000 tons of paddy exports to Mexico and Central America that supports price in South Louisiana and East Texas.

    Marketing initiatives continue to produce positive results out of the Port of Lake Charles and by rail from the SLRF near Lacassine to Mexico. Next week a vessel is due in port to begin loading a 30,000-ton shipment destined for Honduras.

    Full report.

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