|
Rice Market Update: Another Perfect Storm Brewing?
KATY, TEXAS
A few days ago we were having an uneventful week by way of harvesting – weather conditions throughout much of the delta were favorable and growers were able to make good progress on bringing rice to the bins. Today we have two major storms headed for the gulf coast and are currently predicted to arrive on the same day and time, something that has not happened since the Great Depression in 1933. In some parts of Texas, the harvest is already in its final stages.
Louisiana is reported to be over 60 percent harvested by the USDA, but local sources assess that the harvest is further along there. Arkansas’ weather continues to be favorable and growers remain hopeful for both strong field and milling yields. However, the various issues affecting the market along with weather patterns have farmers on the edge.
Prices in the long-grain states have been largely sideways over the past few weeks. Given the focus on harvest and the lack of obvious direction in the cash market, flat prices are likely to continue until some disruption in the market occurs. For example, in Louisiana this week a large paddy exporter entered the market, offering about $0.45 per cwt over last week’s price. They quickly scooped up all that was needed, and the market returned to its dormant state. Since that flurry of business, the bid is reported to have fallen back to $11.75 per cwt.
The South America rice complex grows more intriguing by the moment as producers brace for a drier growing season and prepare for fewer rice acres. Planting milo already seems to be captivating the interest of rice growers concerned about water shortages. A perfect storm is brewing in Brazil as well as they are coming off a year of reduced production, increased exports and a devastating COVID-19 situation A tight stock situation followed by a smaller crop from South America may very well result in a smaller presence in Central America and even Mexico, which bodes well for the US. With export demand for US long-grain rice slow to develop at this point, the industry could greatly benefit from increased market share in those key Central American markets. We remind you that the Mercosur harvest is not until February-March.
Iraqi tenders have once again surfaced in the rumor mill; however, details are opaque at best. It appears that there is some anticipation that the Iraqi Grain Board will announce a tender for US long-grain rice before long. The Iraqi Prime Minister and a trade team are in Washington
D.C. this week and among the list of issues to be discussed are purchases, financing of U.S. rice.
Another gripping story in the world rice industry pertains to the Yangtze River in China where roughly 13 million acres of agricultural land have been flooded, most of which is believed to be corn, beans, rice, and livestock. Currently, rice damage is believed to be downplayed by the Chinese government for political and food security purposes. Regardless, this behemoth of a rice market has seen stocks rise for more than 10 consecutive years, making the potential impact of these floods on the global rice market extremely difficult to predict.
Thai export prices continued to improve this week while the other key exporters all saw small declines in export values. Overall, the market in Asia is generally neutral against last week, and most of the export hype seems to be originating out of Vietnam. ∆
|
|