Rice Market Update: Conditions Support Firm Pricing

    The global rice market has been surprisingly consistent since the turn of the year. As it relates to the US, the supply-driven market could be upgraded from sideways to bullish, as long as we are looking at it with cautious optimism. A shorter supply has been the expectation all year based on the increased costs of inputs, and is only reinforced by the current geopolitical environment.

    The one thing that would confirm a bullish market is a marked increase in milled rice long grain exports—they have been steady, but paddy sales have been a bit stronger by comparison. Iraq would change the picture in an instant, but that doesn’t look to be on the short-term horizon.

    In Asia, Vietnam has seen a substantial increase in business despite a slight increase in price this week, largely by way of the Philippines increasing their projected imports by over 700,000 tons. Viet prices bumped up to $405pmt, while Thai prices dropped down to $400pmt, primarily because of fluctuations in the Baht.

    Thailand is much like the US—steady business all round, but Iraq is the big wild card. In South America, the headline story is the drought where at least 60,000 acres have been lost in Paraguay and Argentina—a sad story for these regions that have become key suppliers in the Western Hemisphere.

    On the ground in the US, eyes have turned to planting in most regions as the tail end of first-hand supplies for old crop are being sought out. Texas still has strong prices at $17/cwt when rice can be found. Arkansas is seeing prices between $15.25 and $16.50, as are Mississippi and Missouri. Louisiana has price indications at $15.25, but the industry is much more focused on planting new crop at the moment.

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    We would be remiss not to mention how the Putin/Ukrainian conflict continues to roil the food and input market, which is further complicating an already strained logistics system. It’s important to know that Russia and Ukraine are two of the most important food suppliers for low and middle-income countries in which tens of millions of people are already struggling for food security.

    95% of Ukrainian wheat exports go to the Middle East, Africa, or Asia. The largest importers in 2020 were Egypt, Turkey, Bangladesh, Indonesia, and Pakistan. Russia provides a large percentage of wheat for sub-Saharan African countries like Nigeria and Sudan.

    These countries who count on Ukrainian wheat will be in trouble, as Ukraine should be planting their wheat fields in the next two-three weeks. But the war is largely preventing that from happening, and supply will be severely diminished in the coming year. The war currently being waged by Putin has a ripple effect that could cause a war for food security in the coming months.

    The weekly USDA Export Sales report shows net sales of 70,000 MT for 2021/2022, which were down 17% from the previous week and 39% from the prior 4-week average.

    Increases primarily for Japan (25,000 MT), Haiti (15,300 MT), Guatemala (9,500 MT), Saudi Arabia (8,600 MT), and Honduras (7,100 MT), were offset by reductions primarily for Mexico (7,900 MT). Exports of 81,100 MT were down 31% from the previous week, but up 2% from the prior 4-week average.

    The destinations were primarily to Nicaragua (26,400 MT), Mexico (18,000 MT), Japan (13,000 MT), Saudi Arabia (9,400 MT), and El Salvador (8,600 MT).

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