Rice Market Update: Rain Puts Delta Famers Behind on Planting

    Rice planting. Photo: University of Arkansas

    Planting in Arkansas is not going as planned. The weather has been playing an adversarial role this year, preventing typical planting progress. As of April 25th, the USDA Crop Progress report has Arkansas at a dismal 14% of normal, compared to 41% planted this time last year and a 48% 5-year average. Weather isn’t favorable this week either, but there is still time to recover.

    Mississippi is also behind schedule recording 25% this week, compared to last year of 45% and a 5-year average of 41%. Louisiana and Texas are progressing fine, both right at normal with 80% and 77% respectively. Emergence in Louisiana and Texas is strong as well, showing 70% and 61% emerged, while Arkansas is only at 6% compared to 21% average, and Mississippi at 7% compared to a 20% average.

    On the ground, new crop contracts in Texas are about $1/cwt over September futures for high quality rice, and half that for other varieties. In Arkansas, prices are registering at $15.50/16.25. Milled rice business has not been exciting, and there doesn’t look to be much on the horizon.

    US milled rice is still quoted over $670 pmt, while other players in the Western Hemisphere come in at $555pmt in Brazil, $540 pmt in Uruguay, and $545 pmt in Uruguay.

    A NASS GAIN report on Argentina was published this week, showing production is expected to be 780,000 tons on a milled basis, or 2 million tons rough, planted on 432,000 acres. Planting is expected in August, and as of the publish date the drought isn’t expected to relent, so acres will look just like last year.

    The situation here sounds much like the medium grain market in California, where river and reservoir levels are at record lows, impeding normal planting decisions. Couple this with the global spike in fertilizer prices, it will be a struggle to maintain rice acres where is drought rampant.

    Exports are expected to be down to 340,000 tons, from 370,000 tons last year. The big wild-card will be Brazil, as it is expected to import large amounts from its neighbors on account of their drought.

    In Asia, the story is the same as well. India is keeping a cap on prices, holding steady at the $355-360 pmt price range. Thailand did bump some this week, up to $430 pmt, from $410pmt a week ago. Vietnam is on par with last week at $415 pmt.

    To be seen in the coming months is the impacts of increases in fuel and fertilizer for these historically cheap production regions. The reaches of Russia’s conflict with Ukraine are still being discovered, and the ripples will be felt for months to come in the food supply chain.

    The weekly USDA Export Sales report shows net sales of 16,400 MT this week, down 75% from the previous week and 53% from the prior 4-week average. Increases were primarily for Japan (12,000 MT), Canada (1,400 MT), Costa Rica (1,000 MT), Mexico (900 MT), and Argentina (300 MT).

    Exports of 88,800 MT were up noticeably from the previous week and up 84% from the prior 4-week average. The destinations were primarily to Mexico (31,400 MT), Colombia (30,800 MT), Japan (12,000 MT), Costa Rica (11,000 MT), and Canada (2,300 MT).

    In the futures market, action has been increasing prices, perhaps because of the slow planting in Arkansas a potentially shorter crop. The average daily volume was 1,205 which is down 41%, and the open interest was 10,417, just about the same as last week.

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