Rice Market: U.S. Futures Decline as Global Prices Rise

    This Week

    USDA’s World Market Price factors were increased this week by 24 cents on both long grain and medium/short grain.  This moves the on-farm value of long grain rough up to $11.87 per cwt.

    With low volume early in the week, rice futures tried to push up into positive territory, particularly on Wednesday and Thursday, only to be sold back down into the red on both days.  Friday saw more selling and this time on better volume.  The influence of the volume is hard to figure, though, since it’s obvious that rolling from the Sep into the Nov has already started.  In any case, the week ended with the nearby Sep contract settling down 14-1/2 cents on the day at 12.94 and off on the week by 18.5 cents from last week’s 13.125 close.

    There is no doubt that the weakness in grains and cotton have contributed to rice futures weakness, and it looks to us like rice futures are going to be a tough trade at least until harvest in the South is finished.  We suspect that the trade will continue to support rice futures prices in the high 12’s, since at and below those levels, the market starts to become dangerously unsustainable from a cost of production and financing standpoint.

    In general where rice futures are concerned, we see upside potential as greater than downside risk at current levels and/or lower.  But that does not mean the market does not have to be concerned about lower selling from funds or commercials – and it could be quite a while before we see prices actually go up substantially again. We say again, if trading rice or any other futures contracts, we recommend calm decision making and good money management.


    This week’s export sales report showed the first of the large sales out of the new crop/new marketing year which starts on August 1st.  The net sales were a good 69,100 tons total, with most of the tonnage in the new marketing year.  Included in that figure were 50,100 tons of long grain rough sold to Mexico (30,000 tons), Turkey (10,500 tons), Costa Rica (5,000 tons), Honduras (2,600 tons), and El Salvador (2,000 tons).

    Long grain milled and brown sales totaled 5,300 tons, with 4,900 tons sold to Colombia and 700 tons of milled and brown sold to Canada.  Medium/short grain rough posted a solid 15,800 tons of rough sold to Turkey for the new crop year, as well as 3,200 tons of milled destined primarily for Canada and Australia.

    Export shipments for the week were fairly light at 39,100 tons.  This consisted of 22,000 tons of milled and brown long grain, with the big consignees being Colombia for 10,900 tons, Haiti for 8,600 tons, Canada for 1,000 tons of milled and brown, and Mexico for 800 tons.  There were no long grain rough shipments this week.  Medium/short grain loadings included 13,200 tons for Japan, 1,400 tons (including 100 tons of brown) for Canada, and 500 tons for Jordan.


    Asian prices continued to firm this week.  Thai 100% Grade B ended the week at $450 per ton fob vessel, while Thai parboiled held at $445 per ton.  Vietnam’s 5% milled was up $20 on the week at $455 per ton.  Pakistan’s 5% milled was called $440 to $450 per ton, and its parboiled held at $455 per ton.  Indian 5% long grain milled was steady at $440 per ton, with parboiled also holding at $425 per ton.

    Full report.

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