House Agricultural Labor Working Group Releases Interim Report
On Tuesday, the House Committee on Agriculture's Agricultural Labor Working Group released an interim report on the labor challenges facing the agricultural sector. The report outlines initial findings based on a series of stakeholder roundtables the Working Group has held over the past four months. These roundtables covered topics such as challenges in accessing and navigating the H-2A temporary agricultural program and labor and producer perspectives on the H-2A program. The Working Group is co-chaired by Reps. Rick Crawford (R-AR) and Don Davis (D-NC) will work toward developing legislative solutions to the challenges identified in the interim report.
Farm Bill and Appropriations Update
As of this week, all four Agriculture Committee leaders have publicly stated support for extending the 2018 farm bill as they continue to work on the next farm bill. There is interest from both parties in including an extension on the next continuing resolution; however, specifics of an extension have yet to be determined. The current continuing resolution (CR) expires on November 17. Currently, most are optimistic that an agreement can be reached on another CR to temporarily fund the government and avoid a shutdown while the House and Senate continue work on the funding bills for fiscal year 2024. The House has passed seven of twelve of its appropriation bills but failed to pass the bill to fund USDA in September. The Senate passed three of its appropriation bills last week, including the USDA funding bill.
| The El Niño weather pattern means different things to different regions, and the impacts are far-reaching across the rice chain. For example, El Niño was the reason cited by the Indian government to restrict exports. In California, it means a return to wetter weather and a full-size crop. In South America, its absence has meant drought and a reduced crop last year, and its return has gone so far as to cause flooding in places like Ecuador to reduce their crop. Some have blamed El Niño for the problems with the Mississippi River, and a newly emerging problem is the freshwater drought in the Panama Canal and its ensuing reduction of throughput. Let's not leave out that southern Louisiana is suffering salt intrusion from lack of rain. "If we don’t get 20 inches of rain by planting season, we will cut back 30% on acres,” according to a leading rice farmer. Weather patterns and climate risk continue to play a significant role in the rice market, and being able to respond in a timely manner is of utmost importance. |
 Source: https://twitter.com/majorflood42 |
| All this chaos shines a light on the United States as the clear winner in the Western Hemisphere in the next several months — we need only to take advantage of the opportunity. The large crop makes us the only supplier to Central and South America until their harvest in the Spring of 2024, but we are having trouble loading barges due to the low levels of the Mississippi. The poor milling quality and low head yields can be turned into a positive by helping the U.S. industry claw back some of its market share in the parboiled space. Conversations are starting around the possibility of U.S. long grain finding its way to Cuba since Vietnam shipments are getting tied up in the Panama Canal. Even the spread between U.S. long-grain and Asian rice is the smallest it’s been in years because of strong demand from Indonesia and no shipments from India. Every opportunity has its challenges, but things are setting up to be an exciting year. The monthly FAO Rice Price Update dropped for its second consecutive month for October, but it’s still 24% more than this time last year. The drop was led by Japonica varieties, falling 9% from last month with California in full swing, while Indica varieties dropped 5.3% as the panic works its way out of the market from the Indian export ban. If Indonesia didn’t double its imports in the last quarter of the year, we could have seen more softening in Thai and Viet prices, but Indonesia’s insistence on procuring supplies for food security in the event of severe weather events has kept the pressure on prices. The monthly World Agriculture Supply and Demand report was just issued and offers a relatively sideways outlook for rice. Carryout dropped 600,000 cwt to 22.2 million cwt this month, with few updates for other supply/demand elements. Of note, however, is an increase of 10% in the estimate for the size of the Brazil crop from this month to last month. The new estimate now puts Brazil at 7.5 million metric tons. The increase comes with the return of El Niño and solid rains as high as 200% of normal in some regions. This means more competition for Mexico after May 2024 when the Brazil harvest is ready for export. The weekly export sales report shows net sales of 36,000 MT this week, down 62% from the previous week and 43% from the prior 4-week average. Increases were primarily for Venezuela and Mexico. Exports of 96,100 MT — a marketing-year high — were up noticeably from the previous week and from the prior four-week average. The destinations were primarily to Iraq (43,300 MT), Mexico (38,300 MT), Haiti (7,000 MT), Canada (2,900 MT), and Jordan (2,200 MT). |
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| Texas rice farmers through the Texas Rice Council partner with the US Rice Producers Association to promote the sale of Texas rice at home and throughout the world. Assisting in that effort, the generous support and involvement of our industry members have contributed greatly to the success of the US Rice Producers Association. While important issues are ongoing, we continue to make great progress for Texas rice farmers in important export markets such as Mexico, Central America, and throughout the Western Hemisphere and other potential areas. For the second year, USRPA would like to celebrate our farmers’ hard work and dedication by organizing a reception for them. It will be a great night out with a social hour, a three-course meal, an open bar, great music with a live band, a silent auction, and a live auction. It will be a night to get the rice farming community together and at the same time, help raise funds to continue our mission of promoting the U.S. rice to the world. |
| Senate passes agriculture funding bill On Wednesday, the Senate passed a three-bill funding package containing the MilCon-VA, Agriculture-FDA, and Transportation-HUD appropriations bills for fiscal year 2024. The bill passed on a bipartisan 82-15 vote. These three bills are the first to pass in the Senate while the House has passed six of twelve bills. Previously the House failed to pass its version of the Agriculture-FDA appropriations bill in September. Members are currently working behind the scenes on changes to the bill that would ease its passage by the full chamber. The federal government is operating under a continuing resolution that will provide funding through November 17. House considers EPA funding bill On Thursday, the House began consideration of the Interior and Environment appropriations bill for fiscal year 2024, which contains funding for the Environmental Protection Agency (EPA). As written, the bill would cut funding to the EPA by $3.9 billion and also contains a provision repealing the EPA’s rule regulating waters of the United States (WOTUS). The Senate passed its version of the bill out of the Appropriations Committee in July, but the full chamber has not yet considered the bill. Commerce lowers duties on phosphate fertilizers On Thursday, the Department of Commerce announced it had finalized its review of Moroccan phosphate fertilizers and was lowering the duties levied from 19.97% to 2.12%. These duties were imposed in 2021 after the International Trade Commission (ITC) found that Morocco and Russia had unfairly subsidized fertilizer production and imposed fees on fertilizer imports from the two countries. In September of this year, the U.S. Court of International Trade ordered the ITC to reconsider the decision which resulted in how the duties were calculated. Farm Bill Rumors This week there were discussions in the House about completing a farm bill proposal by November 17 in order to begin the process of having it scored by the Congressional Budget Office. This would allow a possible scheduling of farm bill consideration in December. Under this scenario, a separate “short-term” farm bill extension would still be needed by year's end. However, it would allow the House to consider a farm bill on the floor in December. Stay tuned -- there is an enormous amount of work that would need to be accomplished in order to meet this aspirational schedule. |
| This time of year is when the market normally gets fired up and going. Harvest is all but complete, crop size and quality are relatively well known, and transactions are coming in hot and heavy. However, the low levels of the Mississippi River are wreaking havoc on all grain and barge shipments, putting pressure on prices and delivery schedules. The crop is in, but it’s having a difficult time moving out, and its impact is making waves across the entire supply chain. Last week we noted it was changing FOB pricing because barges can’t be loaded fully, therefore increasing the marginal cost of a ton of rice. CIF contracts are now having to be renegotiated because all prices previously booked were based on the assumption of a full barge. This is slowing the delivery schedule, in turn slowing demand for rice, which is making the spot market trading activity light at best. We hope this is a short-term problem, but there is nothing to be done about it except to hope for rain. The relatively static/sideways future market further confirms this marketing year is slow off the starting blocks. Increasing price to incentivize growers to sell physicals is difficult for the time being because the export sales aren’t there. Growers are also hesitant to decrease price to create sales, simply because even if the sales occur, there’s no guarantee of shipment because of the barge problem on the river. These problems aren’t impacting every rice mill or grower, but enough to put a damper on the broader market. We do expect the weather to alleviate the problem in the coming weeks and see an uptick in both exports and sales, but more precipitation is necessary for that. We know that the harvest in South America will arrive in March 2024, so shipping all the rice we can before competition heats up is key to achieving a balanced market. We’re not hitting the panic-button by any means, but if we are still having barge-loading issues after Thanksgiving, some of these more obtuse problems could become more acute and have a direct impact on every level of the rice supply chain.In Asia, the anomaly of price divergence between Vietnam and Thailand is growing starker by the week. This does not happen on a regular basis, but this week yet again Thai prices dropped another $5pmt, now around $565pmt while Viet prices jumped nearly $10pmt up to $640pmt. A spread this significant is extremely rare; typically a difference of $30pmt is about as high as we see. The current market is trading at a difference of nearly $85pmt, largely due to Thailand’s new crop harvest coming available. With India still out of the picture, demand is forced to these two primary exporters, which could be setting up for significant price adjustments once India returns. The weekly USDA Export Sales report shows excellent net sales of 93,500 MT, up 44% from the previous week and 78% from the prior 4-week average bolstered by sales to Mexico, Colombia, the Dominican Republic, and Haiti. Conversely, exports of 27,200 MT were down 61% from the previous week and 32% from the prior 4-week average. |
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 2024 agenda planning is well underway, but we want to hear from you! Have an idea for a session topic or a speaker that is the perfect fit for the Rice Market & Technology Convention? Let us know by emailing us or filling out the form below. |
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