Some remarkable headway in Monday’s Crop Progress and a favorable weather outlook offered resistance to rice futures this week. Traders may also be stepping aside ahead of next week’s May 12 WASDE. Note the initial 2022 balance sheets will include planted acres from the March 31 planting intentions, which still point to a bullish price outlook.
After making a new contract high at $17.51 ½ last Friday (April 29), the September contract turned lower this week. Trading finished Thursday at $17.11 ½ , off the session low of $16.90. New crop bids at east Arkansas mills on Thursday were $7.56 to $7.61/bu. for fall delivery. Bids for first quarter 2023 delivery were $7.70/bu.
Last Friday’s trading had taken the September contract well into “overbought” territory (RSI: 80). Trading this week could be considered a technical correction. The daily and weekly charts remain in an up-trending channel. If the weather outlook holds, significant planting progress in the Midsouth will pressure the market next week.
The findings in next Thursday’s WASDE will have longer term influence over price direction.
Monday’s USDA Crop Progress had U.S. rice acreage at 45 percent planted as of May 1, up from 26 percent the prior week. Arkansas and Mississippi made significant headway in the later part of last week. Both states covered 26 percent of expected acres in a narrow 3 – 3 ½ day window. The outlook for the upcoming week is favorable and should allow Midsouth planting to catch up to (if not surpass) historical averages.
Table 2. U.S. Rice Planting Progress, 2022.
May 1, 2022
Highlights from CF Industries quarterly earnings release:
- CF estimates 2022 U.S. corn plantings will be 91 to 93 million acres compared with USDA’s estimate of 89.5 million acres.
- Fertilizer trade flows to Brazil will be among the most affected by Russian export problems.
- expects some exports of urea from China to restart in the second half of 2022.
- expects Russian fertilizer producers to continue to export, but at reduced rates.
Highlights from Corteva Inc.’s earnings release:
- expects more than 70% of Ukraine’s spring crop will be planted.
- currently doesn’t see any switching between U.S. corn and soy plantings.
- Brazil is seeing strong incentives to plant more soybeans in fall ‘22.
Russian fertilizer cargoes sailing to Brazil averaged 81,000 metric tons a week in April, about 9% below 2022 average pre-war levels of 89,000 tons. In the four weeks following the Feb. 24 invasion of Ukraine, Russian cargoes averaged 146,000 tons a week, as the anticipation of sanctions likely encouraged earlier delivery of contracted shipments.
New inflow is expected to slow this week, with three, as opposed to last week’s 10, Russian vessels (about 75,000 tons of fertilizer) en route to Brazil. Securing enough fertilizer for the 22/23 crop is a top priority for Brazil.