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US RICE PRODUCERS
KATY, TEXAS
We are fortunate for the currently stable condition of the U.S. rice market.While it doesn’t make for exciting headlines, steady business and fulfilled expectations are good for farmers and the industry. The markets in the Far East, however, are in the midst of the Indian storm. Volatility is rampant with supplies coming out of India at $490 pmt, leaving Vietnam and Thailand in a scramble to compete. Buyers in West Africa are also adjusting their procurement strategies now that India is back in the game.The elephant in the room right now, though, is that India is expected to remove the 10% duty and minimum export price of $490 pmt. This expectation is delaying large tenders from Indonesia and perhaps the Philippines, and is throwing the pricing matrix into disarray.We mentioned the price spread last week between these origins and the United States. But if the minimum export price is removed, the spread will be even larger, putting downward pressure on global prices.That being said, there are several reports of recently traded Thai long grain rice into several countries in the Western Hemisphere with landed prices under $700/ton.
On the ground here in rice country, news of milling yields isn’t encouraging for long grain or medium grain. California’s head rice is in the mid-50’s where less than 50% of the total crop has been graded, but the trend isn’t looking up for the balance of the crop.In Arkansas, the story is the same. Therefore, much of the pricing conversation is focused on the how the increased paddy volume to produce a milled product will be offset by a decrease in byproduct values. It’s difficult to quantify exact values until the market establishes itself a bit more, this year’s marketing cycle just proves there are two sides to every coin.
Right now, we are seeing prices in Texas at $15.25-$15.75/cwt.Louisiana is steady at $15.50/cwt, while Mississippi, Arkansas, and Missouri are all at $14.75-$15.25/cwt. The futures market has been quite sluggish as well, not reacting like the equity markets with volatility in the midst of an election year.We do expect, however, to see some larger milled and paddy sales materialize, which will help keep a firmness to the market as we head into the 4thquarter.Let's be clear: These prices do not come close to covering production costs in most rice states.
While export business has appeared quiet, it’s important to note that we have shipped 587,666 metric tons to Mexico through July this year, a 218% increase over 2023! And even with the problems in Haiti highlighted in last week’s report, we have still shipped the same amount through July this year that we did last year. This is why we opened the report stating that we may not be making headlines, but consistency is key to a healthy market. Venezuela is another standout, where we only exported 4,660 metric tons from January to July 2023, and then exported a whopping 146,584 metric tons through the same period this year.Much of this demand, especially for paddy rice is due to the Mercosur countries’ low inventories and firm prices.Spring planting in this region indicates a significant increase over last year that many expect will alter the current prices.Weather is the major factor and mid-November is the cut-off planting date for most.
TheUSDA Export Sales reportshows net sales of 65,800 MT for this week, which were down 48% from the previous week and 6% from the prior 4-week average. Increases primarily for Japan (44,200 MT), Mexico (21,200 MT, including decreases of 100 MT), France (500 MT), the Dominican Republic (400 MT), and Canada (400 MT, including decreases of 600 MT), were offset by reductions for Honduras (800 MT) and El Salvador (500 MT). Exports of 40,000 MT were down 38% from the previous week and 29% from the prior 4-week average. The destinations were primarily Guatemala (11,300 MT), Honduras (11,200 MT), Mexico (6,400 MT), South Korea (5,700 MT), and Canada (1,800 MT).∆
US RICE PRODUCERS
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