India Continues To Hover Over The World Rice Market
KATY, TEXAS
As Louisiana rounds the turn into the final third of harvesting their crop, Arkansas is just getting started, while Missouri and California haven’t even gotten off the starting blocks. Louisiana has raced ahead with 71% harvested this week with an expectation of slightly above average yields and head rice ranging from 52-54 lbs. Texas is close behind at over 60% harvested, with the balance of the rice coming in drier than preferred. Arkansas is third with only 4% harvested, Mississippi with 2%, with Missouri and California at 0. The overall condition remains solid, gaining one percentage point this week over last week up to 68% in the good to excellent range. 27% is in the fair category, which is the same as last week, which leaves only 5% in the poor/very poor spot.
In the milled rice world, prices remain firm in the wake of global events and strong business from Iraq, Haiti, and domestic buyers. Paddy prices on the ground, however, are in a bit more flux with harvest underway and the old crop/new crop price convergence upon us. In Texas, prices are reported at $16.61-17.11/cwt, while in Louisiana initial numbers are at $16.50/cwt. In Mississippi, Arkansas, and Missouri, prices are looking closer to $15.75/cwt. While these prices remain strong, futures have been weak (ranging from a 2-3% drop in all contracts Sep ‘23-Sep ‘24) based on stronger supply, so the nexus of the futures and the physicals will be upon us in the coming weeks.
The Indian export ban has officially reverberated around the globe. Stories about food security and soaring rice prices have made it outside of the rice world and into general news reports circulated by the Associated Press. As a result, Thai prices are still extremely high at $640 pmt, and Viet prices closer to $430 pmt. This is perhaps the smallest weekly change since the announcement, and maybe a signal that we will see a leveling off of prices moving forward. Much of the hyperbole in the headlines is coming from the most recent FAO report, which we summarize regularly here in the Rice Advocate. Some of the more drastic headlines include phrases like “Rice Prices Soar,” “Rice prices highest in 12 years,” or Food inflation fears spike in Asia.”
Since we can trace this all back to India announcing a white rice export ban, we can take it one step further and see they have a general election in the spring of 2024. With El Nino weather patterns potentially impacting the crop and domestic food inflation soaring in the country, the government stepped into control of food security at home (before the election) at the expense of food security abroad. The kicker is that right now, global rice stocks are higher than last year so the danger is more perceived than actual. But if El Nino does impact the Indian crop at the same time wheat production and export are impacted by the Russia/Ukraine war, we could have a real problem on our hands in 2024, instead of the perceived one we have right now. ∆