Rice futures put in another good week with new highs in the September contract. Trading Thursday touched $17.29 with a close at $17.24. This is the highest trading for the September contract since 2011. New crop bids at east Arkansas mills on Thursday were $7.62 to $7.67/bu. for fall delivery. Bids for first quarter 2023 delivery were $7.76/bu.
The rice market is largely focused on Midsouth weather and what it could mean for 2022 production. There’s also some spillover support from the major grains and soybeans. The war in Ukraine continues to generate uncertainty, particularly for corn and wheat. The slow start to planting in the Cornbelt has also kept markets nervous. Brazil has had its driest April in 17 years.
Recall in USDA’s March planting intentions, Arkansas was expected to plant 1.19 million acres of rice in 2022—down 2 percent from last year. Mississippi and Missouri rice acreage was projected to be down 5 percent. Given the historically slow planting pace in the Midsouth, the rice market senses the possibility of a further reduction in acres. As the calendar flips to May, the potential to shift acres to $15 soybeans increases.
As odd as it may sound, this could be a year to stick with your original plans. The current supply-chain challenges are reason enough. If you have all your seed, fertilizer, and chemicals for the growing season, that alone is priceless.
Significantly altering your planting intentions could create a new set of challenges in securing inputs. In addition, the current price strength and the market outlook for rice is encouraging. If rice planting extends into late May, look for the September contract to retest the 2011 highs near $18.25. For Arkansas, the crop insurance final planting date for rice is May 25.
Prevented planting will no doubt be a consideration in a year with historically high insurance guarantees. Unfortunately, there appears to be little chance for field work next week.
In last week’s USDA Crop Progress report, 26 percent of intended U.S. rice acreage was planted as of April 24. This lags the 45 percent planted last year and the 5-year average of 47 percent. Note the planting progress for the Midsouth states compared to the 5-year average.
This year is the slowest start for Arkansas since 1993. Based on historical averages, Arkansas, Mississippi, and Missouri would normally be 50 percent (or more) planted by May 1.
Table 1. U.S. Rice Planting Progress, 2022.
April 24, 2022
This was a volatile week for New Orleans urea prices with barges trading in a $100/ton range. Barges traded down to $620/ton early in the week before recovering to $720/ton Thursday.
Wet weather and lower corn acreage estimates have provided a softer tone to the urea market for most of April. The late week recovery in urea came from a 1.5-million-ton tender from India. The recent weakness we’ve seen in retail urea prices may be coming to an end. Expect firmer prices to start the new month.