The rice industry has had yet another slow week as the holiday season looms. The WASDE report, issued this week was a net neutral for the industry, meanwhile the world market price estimate was held constant for another week. Export sales and loadings were up noticeably, and the Asian pricing scenario was mixed. The domestic market continues to soften with a general lack of new business, and the futures market has reflected similar softness, even in light of the government reports. Overall, it has been another lackluster week, and until the trade begins to move after the first of the year, will likely remain so.
The UDSA released its monthly Supply and Demand outlook this week with minor revisions from the last report. On the supply side, the import estimate was reduced by 1 million hundredweights, reflected in the long grain side of the balance sheet. This revision brings the total supply figure 263.8 million hundredweights and a net 1 million hundredweight decrease from last month. The demand side of the equation remained unchanged since the last report with a total usage figure of 225.0 million hundredweights. The resulting impact of the balance sheet adjustments is a net decrease of ending stocks by 1 million hundredweights with the new estimate being 38.8 million hundredweights for the crop year. As a result of the changes, the on farm price was reduced by $0.20/hundredweight on both ends of the range with the new expected farm price being $13.10 – 14.10/hundredweight.
Export sales for the week increased by 47% over last week’s report with a total of 78,700 MT. Sales increases for Japan (24,200 MT), Mexico (19,800 MT), Haiti (16,300 MT), Honduras (13,200 MT), and El Salvador (6,000 MT) were partially offset by reductions to unknown destinations (9,000 MT), the Dominican Republic (300 MT), and Guatemala (300 MT). Sales were comprised primarily of long grain rice with the exception of the Japanese purchase which was composed of medium/short grain. Vessel loadings were increased by 60% from last week’s values at a reported 86,800 MT. Primary destinations were Libya (16,800 MT), Honduras (13,200 MT), Japan (12,100 MT), Colombia (10,000 MT), and El Salvador (10,000 MT). Loadings were composed of long grain rice with the exception of the Libyan shipment which was medium/short grain.
In Asia, prices were mixed on currency valuations and volatility over the past week. Myanmar 5% ($415/MT) and Pakistani 5% ($335/MT) both reported price increases over the past week. Vietnamese 5% ($375/MT) and Myanmar 5% parboiled ($452/MT) indicated no change in values since the last report. Meanwhile, Thai 100% parboiled ($350/MT) and Thai 100%B ($358/MT) decreased incrementally in price from last week. All prices are quoted in US Dollars and are f.o.b. vessel.
USDA’s reported world market price values have remained unchanged from last week, with the on-farm WMP value of long grain rough reported at $9.53/hundredweight and the medium/short grain rough values at $9.79/hundredweight.
In Texas, the market has weakened with the absence of major selling interest with prices being quoted at the $4.50 – $5.00/hundredweight premiums over loan values for hybrids and conventional respectively. The Louisiana market has also softened for much the same reason. Cash pricing is in the $11.42/hundredweight range with very light selling interest reported.
Mississippi reports pricing at or around $11.30/hundredweight, delivered to a barge loading facility. Grower interest at these prices is virtually non-existent.
Arkansas bids are reported at $0.50/hundredweight under the nearby contract which equates to around $10.55/hundredweight at Friday’s market close.
Missouri reports similar conditions with bids in the $0.60/hundredweight under the nearby contract, resulting in a $10.45/hundredweight price at this time. In the southern states, selling interest is VERY thin at these prices. The majority of the limited sales reported are comprised of growers trying to cash flow at the end of the year.
The rough rice futures market has had a tough week. Monday saw the nearby January contract open at $11.18/hundredweight before falling to $10.875/hundredweight by the session’s close. The next few days saw the market struggle to reclaim ground, but by Thursday’s close at $11.11/hundredweight, the bears won out. Friday saw the market close down at $11.055/hundredweight to post net losses over the course of the week. Overall, the losses ranged from -0.93% to -1.14% for all open contracts on the board. The average daily volume for the week was 1,538.4 contracts on an open interest of 15,000 contracts as of Thursday’s close.
Domestic rice pricing has continued to soften and much of the new crop has been committed at this point. All things considered, there is very little reason for that to change in the next several weeks. As shipments proceed to the mills and those inventories are diminished, the market should see some improvement. In the most optimistic scenario, this improvement is at least 30 days away. At this point, growers should focus on taking advantage of any early season discounts that are available within financial constraints and enjoy the holidays.