If not before, early 2022 will give farmers some hard numbers as to the reality of the overall supplies resulting from apparent lower-than-hoped milling yields throughout the delta region. Most anticipate a tighter supply going forward.
2022 rice planting decisions are up in the air in light of the high cost of fertilizer and many are shifting more attention to soybeans. The bridge to the new harvest seems to be getting longer and the outlook for farm prices remains positive. The question is if farmers can take advantage of the expected conditions.
Since October 1st, the long grain spot market has been largely sideways throughout most of the delta. Cash prices have appreciated only 2% since harvest whereas futures are up nearly 3.5%. Although the market lacks a little excitement on the export front, domestic millings are up an impressive 13.5% year to date. Sluggish paddy exports are being offset by an increase in milled rice exports.
Argentina recently encroached on a key US market, as the country sold 10,000 MT of paddy to Mexico. Brazil is also proving to be a formidable competitor in the paddy arena with stronger shipments to Costa Rica and Venezuela. The improved milling activity in the US is attributed to greater milled rice shipments to markets in Latin America where Brazil and Argentina appear to be less engaged.
Higher domestic use is also thought to be a supporting factor. Fortunately, the export market is propped by the milled market segment, which should begin to have a positive impact on the market if it remains strong.
The USDA posted a statement this week, alerting the US rice industry that the Colombia Rice TRQ went unfulfilled for the first time. Even with the advantages extended through the US-Colombia Trade Promotion Agreement (TPA), US rice sales to Colombia have slid to roughly $5 million in 2021.
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Colombians are citing their larger crop and lower domestic prices as the reason for lower US rice imports. However, the US rice traders are quick to rebut that a growing presence of South American rice in Colombia is another key component to the weaker sales.
Colombia was the 8th largest market for US rice exporters in 2020 in terms of value, making it a critical market for US long grain.
India’s rice exports tapered off significantly this month as demand in Africa wavered. As prices have eroded for the past few weeks throughout Asia, many buyers are postponing their purchases in hopes of securing more favorable prices later. This is compounding the supply situation, adding further negative pressure to the market.
Prices in India were assessed at $359 FOB last week and were moved down to $354 FOB this week; Vietnam saw similar price action. Some traders expect the drop in pricing to precipitate greater demand but believe that has been slow to materialize because of high logistics costs.