South Louisiana Rail Facility’s new rice mill is expected to make its mark on SWLA’s rice industry.
Rail facility secretary-treasurer, Kyle Todd, said milling helps out the farmers by making their products more profitable.
House Appropriations Committee marks up Ag Appropriations Bill
On Wednesday, the full House Committee on Appropriations marked up the Agriculture, Rural Development, and Food and Drug Administration appropriations bill for fiscal year 2024. In a long and contentious hearing, Democrats focused discussion on how the bill impacts energy and nutrition programs. Republican talking points centered on upholding fiscal accountability and reigning in the Department of Agriculture’s authority to act without congressional approval. The bill passed out of committee on a party-line vote. It will now head to the House floor to be considered by the entire chamber. A recording of the markup can be found here.
Agriculture hearings this week
On Tuesday, the House Agriculture Committee held a hearing on rural development programs in the farm bill. A recording of the hearing can be found here.
On Wednesday, the House Agriculture Committee held a hearing on the research title of the farm bill. A recording of the hearing can be found here.
| With the crop planted and emergence on track, all eyes are now on the crop condition and weather. As of this week, 13% of the crop is in Excellent condition, which is 3% lower than last year. 54% of the crop is in Good condition, also 3% behind last year. 30% of the crop is in Fair condition, 4% more than last year, and only 3% of the crop is in Poor condition, 2% more than last year. All in all, good news so far, but weather systems in Arkansas look to threaten the outlook; right now 57% of rice in Arkansas is reported as Good/Excellent, and we may see that number drift closer to 50% if cold and wet conditions materialize and persist. The recent USDA Grain report shows global rice production to be flat this year, as the larger Indian crop, on account of the increased second rabi crop, will be offset by reductions in Thailand and Cambodia. Consumption is expected to grow slightly, and global stocks have bumped as well on carryover from India’s record crop last year. The price graph below paints a clear picture of the global rice trade, where U.S. Long Grain FOB prices are in a class of their own—and that’s not technically a good thing. This is the reason that exports have been dismal all year, and the coming normal crop size this year is expected to change that. We expect price convergence on all parts for the major exporters in the Western Hemisphere; that is to say, U.S. long grain prices will fall, and South American prices will rise. Production hiccups due to drought in some of the major exporting regions in South America have constricted exportable supply, so firming prices are in the future for this region. Brazil is down 7% year over year and Argentina is down 20% year over year, for an expected total supply reduction of approximately 5%. None of this will come to pass until close to harvest, while right now we wait on a stagnant paddy market and a quiet export market with tight supplies to blame. An upcoming tender in Panama for 68,000 tons paddy basis (August delivery) along with climate issues affecting the domestic crops and creating shortages in Ecuador and Peru are expected to influence the market. |
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| Source: USDA June 2023 Grain: World Markets and Trade In Asia, prices for Viet and Thai rice have coalesced around the $500 pmt number. Both countries have the potential to see a slight firming in the coming weeks as demand remains strong from countries like the Philippines, Malaysia, and Indonesia to name a few. Indian prices have inched slightly upwards as well, resting comfortably at $455 pmt, or about 4% higher than three months ago. The weekly USDA Export Sales report is another ugly one, showing net sales of 9,000 MT, which is down 21% from the previous week, but up 34% from the prior 4-week average. Exports of 41,200 MT were down 42% from the previous week and 9% from the prior 4-week average. |
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USRPA would like to welcome and introduce our newest member, Gime Tech Co., Ltd.
Gime Tech, based on Hubei Food Processing Machinery Works dated in the 1950s, is the leading, fastest-growing, and most preferred Chinese company and technology provider offering an end-to-end solution for rice milling, grain processing, color sorting, and cereal milling. Gime Tech is the largest manufacturer and supplier of an exotic range of modern technology rice mill machines, equipment, and ultra-modern color sorters throughout the globe, which are manufactured using superior quality raw materials and modern processing techniques.
Congress Raises The Debt Limit
On June 3, President Biden signed H.R. 3746, the Fiscal Responsibility Act of 2023 into law to raise the debt limit until January 2025. Earlier in the week, the bill passed in the House on a 314-117 while the Senate passed the bill on a 63-36 vote, with both votes showing a decent display of bipartisan support. The bill’s passage followed weeks of conversations between President Biden and Speaker of the House Kevin McCarthy (R-CA) where they negotiated a deal to raise the debt limit and to cut spending, which Republicans had demanded as a condition for increasing the nation’s borrowing limit. The deal rescinds a total of $28 billion in unspent pandemic funding and includes some reforms to speed the energy project permitting process. More specific to the food and agriculture sectors, the law rescinds $3.2 billion in pandemic funding provided to the Department of Agriculture. Regarding the Supplemental Nutrition Assistance Program (SNAP), it expands work requirements for able-bodied adults without dependents (ABAWDs) to individuals aged 18-54. Current work requirements for ABAWDs only apply to those aged 18-49. The deal also eases the SNAP application process for veterans and the homeless by making both groups automatically eligible. It also prevents states from carrying over ABAWD work requirement exemptions between years and decreases the number of exemptions a state can implement. The bill also makes changes to the Temporary Assistance for Needy Families (TANF) program to tighten eligibility restrictions.
Army Corps Pauses Wetland Permitting Process
On June 1, the Army Corps of Engineers suspended issuing wetland Approved Jurisdictional Determinations after the recent Supreme Court (SCOTUS) decision in Sackett v. EPA, where the SCOTUS ruled to curtail the Army Corps and EPA's jurisdiction over wetland regulation under the Clean Water Act. The Biden Administration is working to implement the SCOTUS decision on its narrowed grounds of protection but does not yet have a date for when the determinations will resume. Preliminary Jurisdictional Determinations, which identify a property’s potentially federally regulated waters, will still be processed in the interim.
Agriculture Hearings This Week
On Wednesday, the House Agriculture Committee held a hearing on the nutrition title of the farm bill. A recording of the hearing can be found here.
On Wednesday, the Senate Budget Committee held a hearing on the changing agricultural landscape. A recording of the hearing can be found here.
On Wednesday, the Senate Agriculture Committee held a hearing on the horticulture title of the farm bill. A recording of the hearing can be found here.
| After a successful RMTC in Mexico last week, the trade is buzzing with talk of price convergence in the Western Hemisphere, and in this case, convergence most likely means the U.S. price will have to fall to balance out the increased supply. With harvest wrapping up in South America, supplies are coming into focus, but there the big question hanging over the market is how competitive U.S. rice will be. The short crop and high prices in recent years has created space not only for increased trade from other suppliers in the Western Hemisphere but has left demand centers exposed to even cheaper rice from the Eastern Hemisphere origins like Vietnam, Thailand, and Pakistan. U.S. rice once set the global standard in quality and price, but in the last decade has fallen from that spot as India has taken the reigns as the world’s top exporter by a significant margin. India is expected to export at least 22 million metric tons this year, followed by Thailand with 8 million metric tons, Vietnam with 7 million metric tons, and the U.S. with approximately 2.35 million metric tons. This is a significant bump for the U.S. compared with last year, as it is an expected 21% increase year over year. The tough question that will have to be answered, though, is how the U.S. will compete when the current price for U.S. #2/4 is 29% higher than Thai and Viet prices, and nearly 40% above Indian prices. In the marketplace, farmers can expect the unexpected as the window between old crop and new crop emerges in the next few months. Lower overall harvest numbers in Mercosur, particularly in Brazil, and some questionable numbers with U.S. stocks and acreage will make the remainder of 2023 and into 2024 a real challenge for importing markets. And you can add climate disturbances in certain regions of the Western Hemisphere and Asia to further complicate the outlook. We said it last week and will say it again this week: the “bad news” of falling milled rice prices in the U.S. is actually good news for the health of the industry, as clawing back markets and market share is of paramount importance this year with a return to more normal acreage. To drive the point home, paddy exports of long grain are down 43% YTD, brown rice long grain exports are down 61% YTD, and milled rice exports are down 7% YTD. Some silver lining here, however, is that the FAO rice price index hit its highest point in May at 127.8 points, up 2.9% from April on increased Indica prices, largely due to firming prices in Thailand and Vietnam. This provides support that the only way to achieve convergence isn’t just the U.S. price dropping, but price firming in the Eastern Hemisphere to help close the gap. In Asia, Thai prices are holding steady at $500pmt, as are Vietnamese prices, also hovering at the same price point on strong demand. India remains at $455pmt with strong government intervention. The crop is progressing nicely, with emergence in full swing in all states. Now ratings are beginning to drop reporting 11% of the crop in excellent condition, 59% of the crop in good condition, 27% in fair condition, and only 3% in poor condition. This bodes well this early in the cycle, and field reports offer optimism for conditions thus far to be favorable for high milling yields, but it’s far too early to speak with any certainty. The weekly USDA Export Sales report showed net sales of 11,400 MT, down 32% from the previous week, but unchanged from the prior 4-week average. Increases were primarily for Saudi Arabia (8,600 MT), Honduras (1,500 MT), and Canada (1,000 MT). Exports of 70,800 MT were up noticeably from the previous week and from the prior 4-week average. The destinations were primarily to Panama (29,600 MT), Honduras (17,100 MT), Haiti (10,000 MT), Saudi Arabia (9,200 MT), and Mexico (3,300 MT).w what we have in hand. |
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Last week, representatives of some 180 rice businesses from 35 countries gathered at the US Rice Producers Association’s 12th Annual Rice Market & Technology Convention (RMTC) in Puerto Vallarta, Mexico to network and learn from leading industry experts. The future of the rice industry was largely the theme of the week, due to the ever-evolving world market situation and production concerns.
The conference consisted of two full days of presentations and activities. Long-time RMTC feature and popular economist Dennis DeLaughter set the tone for the week with his opening presentation titled “What Could Possibly Go Wrong?”, giving an overview of the global economic outlook and its intersection with agriculture. In addition to learning from key industry leaders from throughout the Western Hemisphere, networking was a top priority. Attendees enjoyed two networking receptions sponsored by Texas Rice Council, Louisiana Independent Rice Producers Association, South Louisiana Rail Facility, and Certified Louisiana. Throughout the week, participants also had the opportunity to connect with numerous agricultural businesses and organizations in the sold-out exhibition space. Prior to the conference itself, the Central American Rice Federation (FECARROZ) held its regular board meeting, as has become a tradition throughout the years, thanks to the unique working relationship since 1998.
“It’s an interesting moment in the rice industry, and we’re all focused on what’s to come,” Marcela Garcia, US Rice Producers Association President and CEO, said in her opening speech. “Our industry is quite literally charged with feeding the world. What a responsibility we have, and that’s even more reason to make sure that we as an industry have the opportunity to connect like this each year.”
The US Rice Producers Association will continue to provide this forum to ensure the rice industry thrives not only this year but in decades from now. Planning is well underway for the 2024 convention, with more details to be announced in the coming months. Visit www.ricemtconvention.com for the latest updates on next year’s event.
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