The rice industry continues to move along with even more news to digest since the last report. The weekly export sales report indicated another boost in net sales nearing a total of 58,000 MT for the week. This number remains far from optimal but is still enough to be considered healthy for the industry. Additional sales to Iraq or even a few thousand metric tons to Central or South America would be highly welcomed at this time in an effort to alleviate the current glut of rice in the marketplace. Vessel loadings were notably higher than last week with volumes nearing 95,000 MT. Some of this is reflective of the recent high-volume sales but the remainder is an indication that old sales on the books are beginning to be filled. Both of these scenarios are positive for the near-term market outlook.
In Asian markets, the benchmark origins were mostly sideways over the week with some price weakening in key areas. The magnitude and direction of the changes seem to suggest that changing currency valuations had the lion’s share of the action as opposed to true supply and demand fundamentals.
USDA released its world market price this week and ultimately lowered the indicator for both long and medium/short grain classes of rice. This comes as a minor surprise, but optimism remains for an upward adjustment to occur in the coming weeks. The futures market had a rollercoaster ride over the week after last week’s massive gains. The trading action started out bullish with a continued rally, but the interest rate increase on Wednesday sent the financial markets into freefall and ultimately dampened the momentum in the rice market. Thursday’s WASDE report was more neutral to bullish than anything else, but the futures contracts had a different take and the resulting decrease brought the open contracts on the board back into negative territory for the week.
The domestic cash markets continue to soften as harvest pressure from the Upper Delta weighs into the equation and has the expected effect of suppressing prices down river. Along the Gulf Coast, storage is still an issue (especially in Texas) which is having a similar impact in those areas. The harvest in Mississippi is in the final throes while Arkansas and Missouri report well over two thirds of the rice having been harvested at this time. Quality reports indicate lower milling yields in those areas than was hoped for.
In other news this week, the UDSA released its monthly World Agricultural Supply and Demand Estimate (WASDE) with no significant surprises. The revisions for this month were exclusively on the supply side of the equation and consisted primarily of a decrease in average yield by 24 pounds per acre. This decrease led to a downward revision in the overall supply number by 700,000 hundredweights. With no demand side revisions (the Iraqi sales having seemingly been already incorporated into the estimate) the ending stocks estimate was adjusted accordingly by 700,000 hundredweights with no impact on the season average farm price projection.
Things have become more lively in the rice industry over the week as more information becomes available and the market factors appear to be more favorable to movement. The export sales report for the week reported low volume for the current installment, a roughly 70% decrease over the volume of the previous report. Of note is the sale to Iraq that should show up on the next week’s report of a much needed 90,000 MT. This sale, while much anticipated, will help to alleviate some of the pressure on the industry resulting from a large 2018 crop. Vessel tonnage was up from the previous report, and as a percentage increase looks to be very positive. From a tonnage perspective, the increases were marginal but as additional sales show up to be shipped, in addition to the volume already on the books, this figure should be stronger in the weeks to come.
Asian pricing generally appreciated over the week for the benchmark origins. Most, if not all, of the changes, were due to currency valuation changes but the firmness at current levels indicates that there is some stability at this time. The USDA World Market Price estimate for the week saw increases for both long and medium/short grain classes. Given the general direction of the market over the past weeks, this adjustment was somewhat predictable. Again, given the stability of the market currently, the probability of further significant increases is limited.
In the domestic cash markets, very little has changed in most areas with bids remaining in stagnation due to harvest and storage pressure in the various regions. From a production standpoint, the harvest in the Upper Delta continues to roll in and estimates peg that it is almost three-quarters complete in aggregate. Along the Gulf Coast, unseasonably heavy rainfall has delayed the second crop progress to the point that quality and yield are becoming seriously affected. The futures market has had an extremely good with the advent of positive marketing news. All of the open contracts on the board posted positive gains nearing 9% over last Friday’s close. The reasoning for the positive movement is multifold. The finalizing of the USMCA agreement early in the week set the market off to a positive start and the eleventh-hour sales in the export market went on to further the gains. Next Thursday sees the monthly WASDE report from USDA that will have some market changing impacts. Some expectations in the report include revisions to the projected yield numbers as well as export and stock projections.
In this issue:
In this issue:
The 2014 farm bill will expire on Sunday. Latest reports indicate that none of the 12 titles of the farm bill have been resolved. Although Conference leadership expresses their desire to finalize the farm bill in October in order to quickly approve a final agreement in November, without a final deadline imperative there is little possibility of resolution by then.
The main issues remain centered around the commodity, conservation, and nutrition titles, with the nutrition title being the largest obstacle. Budgetary issues, such as spending offsets needed to provide funding to other areas, complicate all these issue areas.
In the commodity title, a House provision to end payments on unplanted base acres remains a difficult issue. Consolidation of programs in the conservation title is encountering opposition. Of course, disagreement over work requirements in SNAP is the most politically charged between Democrats and Republicans.
The expiration of the farm bill will have little impact on the operation of the commodity programs. There are other programs, lacking a funding baseline, that are affected. Conference leadership is discussing implementation of these “orphan” programs with USDA in the hope of utilizing discretionary authority to minimize disruption.
In this issue:
In this issue:
In this issue:
In this issue:
In this issue:
25722 Kingsland Blvd., Ste. 203, Katy, Texas 77494
Phone: 713-974-7423
USRPA does not discriminate in its programs on the basis of race, color, national origin, gender identity, sexual orientation, religion, age, disability, political beliefs, or marital/family status. Persons with disabilities who require alternative means for communication of information (such as Braille, large print, American sign language, language translation, etc.) should contact USRPA at 713-974-7423. EEO.
