The cobwebs are officially cleared, and it would appear the new calendar year is developing an identity of its own. The 15% reduction in supply for this year’s crop is keeping upward pressure on paddy price, which is holding strong across all Southern states. Even milled rice, for the time being, is enjoying stable pricing with continued domestic business and strong purchases out of Haiti.
This is a temporal sentiment though, as it is expected that without Iraq purchases for more rice in the coming months, demand could wane to a point that is injurious to mills.
Prices in Texas are in the $15-$15.10/cwt range, while they are holding firm at $13.90/cwt in Louisiana. Mississippi, Arkansas, and Missouri all remain in the $14.25/cwt range, with nothing in the short term looking to put downward pressure on pricing.
This year supply was down 15%, and given the fertilizer costs, it’s possible to see another reduction again next year. We expect this dynamic is factoring into the stable pricing the market is currently experiencing, as the threat of supply glut is not on the horizon. But to be ever cautious, that could change if Iraq makes their 2022 purchases from our cheaper Asian competitors.
Prices in Thailand actually increased slightly from last week this week, settling in at $417 pmt. Vietnam held steady at $400 pmt, and India steady at $355 pmt and Pakistan at $359pmt. Compare these prices to US Long Grain, which sit at $600 pmt, indicating that additional business from Iraq is not guaranteed, but a possibility.
Taking a look at global food stocks, it’s impossible to not see China standing front and center. With “only” 20% of the world’s population, it holds more than half of the world’s rice, wheat, and corn supplies. That’s a staggering amount, and something we have seen developing for years now ever since China became the world’s largest rice importer.
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The US rice market has been scrambling to gain access to the high-end Chinese market for years now, and it has been an arduous process. However, along the way China has been diligently working to diversify their food security supply chains, expressly into Africa on their “Belt and Road” initiatives.
This may all look above board at first glance, but some have called out China for hoarding the global food supply, and therefore creating instabilities in poorer regions. Whatever the case may be, China’s historic rice purchases have become a normal factor in the market, but at some point in time, the question must be asked, when is enough, enough?
The Weekly USDA Export Sales report shows net sales of 42,700 MT for 2021/2022, up noticeably from the previous week, but down 14% from the prior 4-week average. Increases were primarily for Haiti (15,300 MT), Mexico (10,200 MT), Guatemala (8,600 MT), Canada (4,100 MT), and Saudi Arabia (1,600 MT).
Exports of 22,600 MT were up 31% from the previous week, but down 37% from the prior 4-week average. The destinations were primarily to Guatemala (15,400 MT), Canada (2,800 MT), Mexico (2,000 MT), Saudi Arabia (700 MT), and Honduras (400 MT).