The cash market throughout most of the Delta already seems to be on Christmas break as only limited sales are being reported. Slower demand down the river has kept a lid on long-grain prices, and once again, the cash market in Louisiana, Texas, Arkansas, and Mississippi is unchanged.
The market has traded sideways for nearly a month. While growers require more favorable prices for greater production in 2022, demand requires either higher prices out of South America or even lower prices in the Delta.
US long-grain exports to Venezuela and Mexico have both suffered due Brazil overtaking some of the market. Also, in recent weeks, Brazil made a large sale to the Central America, further reducing the demand for US rice into that region. US paddy prices delivered to Central America are reported to be $20-30 per ton higher than the rice being originated in South America.
Brazil is aggressively seeking to expand its presence in the western hemisphere; according to the latest USDA data, Brazil’s exports are estimated to be up 39% against last year. Meanwhile, the country’s production and domestic use are relatively steady.
In other words, analysts anticipate Brazil drawing down its ending stocks this year in order to achieve greater market share in the region. In fact, Mercosur as a whole is projected to end the year with the lowest stocks seen in roughly five years.
Fortunately, the US rice industry has found some solace in the reinvigorated Iraqi market which has already provided the US with a sizable 120,000 MT purchase.
With Haiti demand trailing last year by nearly 30%, the importance of the Iraqi market has perhaps reached an all-time high. Haitian business seems to be slowly returning following the assassination of the country’s president; however, it’ll likely be years before the market reaches its previous equilibrium.
In Asia, much like the US, the market has remained relatively steady with few changes to report. Prices have held constant, with Thai reporting $385 pmt, Viet reporting $400 pmt, and India still down at $350 pmt. It’s interesting to note that Thai rice has dropped nearly 25% from a year ago, Viet 20%, and Indian rice a mere 3%.
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The consistent pricing out of India can be attributed to their third record crop, ability to maintain shipments during COVID, and what some are now arguing are unfair agricultural subsidies. Viet and Thai rice have seen more drastic fluctuations largely on account of supply side economics and COVID-related port/logistic shutdowns.
The weekly USDA Export Sales report shows net sales of 51,800 MT for 2021/2022, which is up 6% from the previous week, but down 13% from the prior 4-week average. Increases were primarily for Mexico (21,400), Japan (13,000 MT), Nicaragua (11,100 MT), Canada (4,200 MT), and Saudi Arabia (900 MT).
Exports of 60,600 MT were down 1% from the previous week and 27% from the prior 4-week average. The destinations were primarily to Mexico (25,800 MT), Costa Rica (18,400 MT), Nicaragua (11,100 MT), Canada (2,700 MT), and Saudi Arabia (900 MT).