Rice Market Update: 2022 Calm Before the Storm?

    Rice field. ©Debra L Ferguson Stock Photography

    The holidays have descended upon the U.S. rice market, resulting in relative calm in the pricing. Milled rice for Haitian shipments has been steady, while Iraq business is in the rearview. Domestic business is steady, and the Omicron variant of COVID isn’t expected to make significant impacts in the future food distribution to schools.

    The record yield of 7,756 lbs/acre, up over 130 lbs/acre from the previous forecast, is currently the best yield on record. This means that despite an enormous acreage reduction, only a 16% reduction in overall output is on record. However, millers are acutely aware that the yield has the potential to be offset by low milling yields, which may, unfortunately, be the case this year.

    The market conditions in the Mercosur are certainly on the radar. Large unsold Brazilian inventories are having a ripple effect on its exporting neighbors as they approach closer to a new harvest. As a result, a significant volume of both paddy and milled rice from the Mercosur countries is expected to be sold into Central America and Mexico.

    New crop cutting will begin in Paraguay by January 2 and we are currently hearing prices of under $200/ton in origin. Lack of demand has caused price decreases in Argentina and Uruguay as well. Initial harvest is expected in northern Argentina in first days of January, Brazil by January 15 while Uruguay closer to early February.

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    FOB prices range from $270-$305 depending on the location, variety, and quality. We will continue to monitor these and other related Western Hemisphere markets including the current tender for 83,000 tons in Costa Rica that is only for Mercosur origin rice.

    The FAO Rice Price Update shows that the FAR Rice Price Index at 99.9 points in November, unchanged from last month, and 8% below last year. Medium grain rice is up 3.2% on account of the California drought, the highest since February 2015. The report also shows weakening prices for Indian rice because of the Kharif crop harvest, exerting additional downward pressure on prices.

    Asian prices show Thai 100%B in the range of $385-390 pmt, closing the gap with Vietnamese at $410-$420 pmt. Pakistan is at $345-$355 pmt, while India is still in the range of $350-$360 pmt.

    In the futures market, rice finished higher with a bullish technical reverals. Cash prices in Texas remain between $14.25 and $15.00 based on grade. Average daily volume was at 862, a 35% drop from last week. Open Interest was at 8,467, a 9% drop from last week.

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