Farmers Undecided On 2023 Rice Planting Decisions

KATY, TEXAS

   As the market shuts down for the holidays, there aren’t many fireworks to discuss. Prices on the ground are steady, holding firm in Texas at $17/18, in Louisiana at $17, and in Mississippi, Arkansas, and Missouri at $17-$17.25/cwt. Week after week, it appears to be nothing short of miraculous that prices are firm and mills are busy despite the severe drop in YTD exports. Just this week the USDA Export Sales report offers another dismal number, with sales registering at only 5,700 metric tons, a drop of nearly 100% from the last report. In any case, the smaller crop that just got harvested, and the very serious potential of another small crop next year have put the tight supply in the driver’s seat for the U.S. long-grain market.
   The current crop saw severe pressure on the cost of inputs from the Russia/Ukraine war. It’s likely those prices will still be high for rice farmers again, but this coming year rice acres will be fighting against stronger bean prices on account of the government's interest in biodiesel. Reservoir levels in Texas are also of concern and have perhaps flown under the radar because of the severity of the drought in California. It is too early to make firm decisions on the size of next year’s crop, but there are several factors that seem to be working against the return to a “normal” size long grain crop when we look at planting season.
   The December FAO Rice Price Update reports that the All Rice Price Index averaged 114.6 points in November, which is up 2.3% from October, and 14.7% above its value a year ago. This increase from last month is driven largely by a 2.4% monthly rise in Indica prices, which can likely be attributed to the tariffs coming out of India and the ensuing impact on prices. The strong value of the dollar also cannot be understated here as well.
   In Asia, prices remain firm and business is steady. Thai and Viet prices are $453pmt and $455pmt respectively this week, where rice out of Myanmar is quoted at $420pmt and Pakistan at $456pmt.  India remains the lowest with prices bumping in the $400pmt range.
   The weekly USDA Export Sales report shows net sales of 5,700 MT this week, down 93% from last week. Exports of 15,300 MT were up 72% and went primarily to Haiti (7,100 MT), Mexico (3,500 MT), Canada (2,700 MT), Saudi Arabia (1,000 MT), and Belgium (300 MT).
   In the futures market, the average daily volume dropped 30% down to 1,189, and open interest stayed flat at 7,715.  ∆