This has been yet another slow week in the rice trade, from a marketing perspective, as most of the primary factors influencing the market have remained unchanged. Export sales caught a very nice boost in volume, and as was noted in previous reports, the levels have remained sufficiently strong to be encouraging. This is in direct contrast to the underlying uncertainties pervading the export market at this time.
Regardless, continued sales at this pace are very welcome. The vessel loading numbers were acceptable for the week as well. It is surprising that the volume moving is not greater as of yet, given the large amount of sold inventory on the books, but if the long-term trends in the rice market hold then these numbers should increase in the coming weeks.
Asian prices have been very sideways, especially with the fluctuations in the U.S. dollar values over the past weeks. Very little has changed in that sphere which suggests that the market in Asia is arguably as stagnant as that in the Western Hemisphere.
The world market price estimate for the week saw an increase of $0.10 in both long and medium/short grain varieties, the first increase in almost a month. According to this metric, global prices are as strong as they have been in 7 months.
The futures market had a volatile week as rice attempted to trade with the other grains but ultimately posted minor losses for the week as a whole. These losses cut significantly into the gains that were realized during the previous week’s trading.
As the March ’16 contract prepares to exit the board, some increased fluctuations can be expected in the May ’16 contract but major price moves are very questionable at this time.
In the cash market, sales have been slow to say the least. Premiums and basis have been fairly constant for the past several weeks, which has taken some of the interest out of the marketing side of the equation as far as producers are concerned. Put more bluntly, producers have no interest in marketing at current prices.
As the large 2016 crop continues to plough through the system, there appears to be little incentive for the buyers to up the ante until some serious tonnage is sold to the export market. The domestic business alone will not be able to significantly impact the carryover volume in the near future. As such, farmers have been faced with some very hard decisions as they move into the new crop year.
For many growers, a shift into alternative crops has been mandated by cash flows. Others have simply scaled back the total expected rice acreage. Regardless of the reason, the planting report released in three short weeks will have radically different numbers that those that have previously been presented.
Next week’s World Agricultural Supply and Demand Estimate (WASDE) may shed some light on the longer-term expectations. No matter the reasoning, 2017 is going to be a volatile ride for agriculture.