USDA held a two-day Ag Outlook Forum in Arlington, Virginia, this week (February 23-24). At this conference they gave us a peek of the acreage shift that was widely anticipated. This should be a confirmed on the March 9 WASDE report.
The total reduction in rice is 17%. However, if you look at long grain only the reduction is 22%. This is right in line with what this office has been predicting for over a month. We have spoken with seed dealers, co-op managers, farmers and all of our clients – and 22% is exactly what we predicted.
Combine this reduction with the announcement by South Korea that they will plant less rice and the announcement over the last month by both Thailand and Vietnam that they will encourage all farmers to plant less rice, and you might see a major reduction in world stocks.
I firmly believe that the world rice situation will see a major change in production as we continue to trade below cost of production.
The futures market has not responded to any of this bullish news from USDA. We have 973 contracts certified for delivery as of Thursday night on February 23. There are still 1,800 contracts open in the March contract. First notice day is Tuesday, February 28 for delivery of the March contact.
We seem to have a very dedicated group of short sellers in rice. If a 22% reduction planted acreage does not change their mind, we all wonder what will?
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Markham B. Dossett was a Charter member of the New Orleans Commodity Exchange. He has traded rice since early 1981. He owns Talon Asset Management LLC where he hedges rice, soybeans, corn, wheat, cotton and cattle for producers in the South and Southwest.