I don’t remember a year with weather problems to this extent in both Thailand and India. Very dry, hot weather has settled over Thailand and India’s monsoon came late and then weakened in certain areas. One state in India switched rice acres to milo to save water.
Thailand prices crept up again this week to $415 MT for White 5% and $431 MT for White 100% Grade B.
India priced at $368 – $372 MT. U.S.A 4% broken is around $503 – $507.
The Bangkok Post reports that if the drought persists, Thailand may cut exports from the forecast of 10 – 11 MMT to 8.5 MMT.
India reports that the default of Iran’s leading rice importer on $14 million has put Indian exporters in a huge financial bind.
All of this news on top of the Prevent Plant in the U.S.A. has created a bull market in rice futures. U.S. cash market is quiet as the harvest has began on the Gulf Coast. The Arkansas rice experts continue to talk about bug and weed problems.
It looks like cash prices are between $11.25 cwt and $11.55 cwt, depending on the urgency of buyers or sellers. August will be a crucial month for production in India, Thailand and USA. The August 12 USDA WASDE and NASS reports will be pivotal.
We have the highest futures prices since April 2018. We can have much higher prices if the weather and the USDA throw us more curveballs.
I have only been trading rice futures for 38 years, so I have a lot to learn but the seasoned veterans think the Prevent Plant acres are much higher than USDA reports. We know a few clients who planted NO rice this year after decades in this business.
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We have 1,036 registered receipts as of Friday, July 26. No doubt, we will see another 500-800 registered and delivered on FND on August 30. However, I believe most of the contracts delivered will be bought back on the board. The large merchants, big co-ops and banks that “own and roll” for the interest rate will NOT let go of quality rice with all the unknowns in the world rice market.
I am bullish on this market but remind traders to keep some ammunition dry for the inevitable swoon in prices from August 15-30. That seems to happen every FND.
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.
Please Note: Futures and options trading involve significant risk of loss and may not be suitable for everyone.