Rice Market Update: U.S. Milled Looking for Buyers

    ©Debra L Ferguson Stock Photography

    It would be fair to say that harvest is finally over across the country. The very minor few are fighting the weather as they finish. To summarize the results of harvest, we would say the crop is off closer to 20% when compared to the 15% that was expected. Field yields were excellent, but milling yields were off.

    The paddy market is dominating the long grain scene, as milled rice is struggling to find footing after the Iraq business. The unknown at this point is the reality of milling yields are a broad basis. To date, they are coming in lower than anticipated and if that holds up it will require much more paddy to get the whole grains needed for packaging.

    In a bright spot for the U.S. rice industry, the 25% retaliatory duty on U.S. rice was removed by the EU this week. Among other items, this victory for U.S. trade includes milled and broken rice. Recall these tariffs were set in place as a response to the tariffs the Trump administration placed on European steel and aluminum to protect American jobs and industry.

    The removal of this 25% tariff is a good sign that U.S. rice will be competitive again in the European market, and this comes at a time when milled rice exports are needed for the U.S. industry. The situation in Haiti continues to crumble, and fresh Iraq business is a long way off. The industry looks forward to renewed business with the EU in the coming weeks and months.

    This week in Brazil, Planeta Arroz reported the sale of 25,000 tons of Brazilian paddy to Mexico indicating this is the first of a total of 75,000 tons. The slow market conditions and lack of sales to key regular markets have affected each of the four Mercosur countries’ exports in addition to the currency exchange rate that favors exports.

    Don’t forget that Mexico has a duty-free quota until December 31 of approximately 50,000 tons remaining. Most important for any mill is the cost of their raw material (rough rice) delivered to their front door. Any improvement in grain and cooking quality is icing on the cake.

    In Asia, the market has gone markedly quiet in Thailand, despite prices that remain $50 pmt below Vietnam, now at $385 pmt. With a price differential of this magnitude for as long as it has been there, it’s expected that China, the Philippines, and West Africa would jump at the chance for Thai bookings. Perhaps it is COVID and/or the known port issues, but sales are slow to materialize at the moment.

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    In Vietnam, it is much the same. Prices remain higher at $425-$430 pmt and port loadings are slower due to labor shortages. India is the exact opposite, in terms of the port at least, as they continue to race ahead with record exports to liquidate its third record rice crop. Prices are steady between $350-$355 pmt this week here as well.

    The FAO All Rice Price Index averaged 99.9 points in October, down almost 8% from last year, but up only 1.2% from September. We have been reporting the prices for rice out of the primary exporting regions have been relatively stable for the past several months at these lower prices, and this is corroborated by this month’s report. It has been noted in the FAO report that lower milling yields out of the United States is propping up prices a bit.

    The weekly USDA Export Sales report shows net sales of 29,800 MT, which is up 19% from the previous week, but down 44% from the 4-week average. Increases were primarily for Japan (13,000 MT), Guatemala (10,200 MT), Canada (1,700 MT), Mexico (1,500 MT), and Honduras (1,300 MT). Exports of 50,200 MT were down 20% from the previous week, and 4% from the prior 4-week average. The destinations were primarily to Honduras (21,800 MT), Japan (13,000 MT), Mexico (9,200 MT), Canada (2,200 MT), and Jordan (2,100 MT).

    In the futures market, the average daily volume dropped almost 30% down to 1,008. The Open interest jumped 7.90%, up to 8,485. The lows were tested this week but bounced back some. Despite the bounce, futures were still down on the week as the market is looking for more milled long grain business.

    Full report.

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