The USDA World Agricultural Supply and Demand Estimates (WASDE) report was released this week, and offered an outlook that denoted smaller supplies, unchanged domestic use, lower exports, and higher ending stocks—most of the changes a result of medium grain rice instead of long grain.
The smaller supplies are on account of the reduced crop due to drought, unchanged domestic use is what we’ve been seeing all year, and lower exports on account of high prices. The WASDE further reports that the season average farm price is forecast at $15.70/cwt, up $0.60/cwt on higher reported cash prices throughout December.
Global rice supplies are increased slightly by 0.4 million tons, largely in Pakistan. Trade increased by 1 million tons to 50.9 million tons, on account of India’s break-neck export pace.
On the ground in the US, Brazil and other South American suppliers like Uruguay and Argentina are stealing market share in Mexico from the US. With a price difference of over $70 pmt in most cases, the attrition isn’t a surprise, but isn’t welcomed either. But with the short supply this year and another short year expected as planting approaches, this dynamic is almost inevitable this year.
Iraq seems to prefer the price point from Asian destinations right now, and Haitian demand is keeping demand steady, but not enough to provide a bullish outlook. The market is looking sideways at the moment.
In Asia, the Lunar New Year has kept the market quiet, with pricing being very similar from last week to this week. Thailand is reporting prices at $420 pmt, Vietnam $395 pmt, and India down to $360 pmt. Pakistan, who is emerging as a player once again, and trading a significant amount with China, is quoting in the $360/pmt range as well.
Rice News on AgFax
The weekly USDA Export Sales report shows net sales of 193,000 MT, which is a marketing-year high. This means sales were up 23% from last week and up noticeably from the prior 4-week average.
Increases primarily for Colombia (120,000 MT, including 22,000 MT switched from Mexico), Haiti (41,500 MT), Panama (27,400 MT), Japan (25,100 MT), and Canada (1,100 MT, including decreases of 900 MT), were offset by reductions primarily for Mexico (19,500 MT) and the United Kingdom (4,400 MT). Exports of 71,000 MT were up 5% from the previous weeks and 67% from the prior 4-week average.
The destinations were primarily to Panama (27,400 MT), Haiti (26,300 MT), Mexico (5,600 MT), Honduras (5,000 MT), and Canada (2,200 MT).
In futures action, prices from March 22 – Jan 23 have all dropped slightly. Average daily volume registered at nearly 14% higher than last week, up to 1,066. Open Interest also rose about 6% up to 9,335. At low prices that we saw this week, buying is likely in order to scoop up the value.