It has been an interesting week for the September contract. The week’s 96-cent trading range was captured in Tuesday’s wild session, which included a new contract high of $17 and a low trade of $16.04. From a chart perspective, Tuesday’s trading range gave the impression of a market top.
However, the September contract has managed to negate this idea with a higher close both Wednesday and Thursday. In Thursday’s Export Sales reporting, long-grain rough rice sales reached an 8-week high last week of 32,656 tons. Nearly all of that was a single sale to Mexico.
Of interest, the $17 mark is the highest trade for the September contract since October 2011.
CBOT September Rice Futures, 15-Year Monthly Continuation. Click Image to Enlarge
Fundamentally, the new crop contracts are supported by the slow planting progress in the Midsouth. As of April 17, Arkansas was just 9% planted compared to the 5-year average of 34%. Mississippi was 11% planted and Missouri was 1% planted.
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Normally, the two states would have 20 to 30% planted at this point. Little, if any, field work occurred this week. More rain chances are in the outlook for Sunday and Monday. A huge question mark hangs over Midsouth rice acres, especially when looking at all angles: the planting delays, diesel futures trading near $4, soybeans above $15. You have to be an optimist and consider the potential the rice market holds.
Fertilizer Prices
Over the last three weeks, New Orleans (NOLA) barge prices for urea have been trending lower. The nitrogen market is trying to determine if this late surge in corn prices will buy back some acres. The weather is interfering though as the key “I” states had zero corn planted as of Monday.
Following the March 31 planting intentions, new crop corn has rallied over 90 cents. FYI. Most of Arkansas reaches the corn prevent plant date on Monday, April 25.
Fertilizer Prices, U.S. Gulf ($/ton). Click Image to Enlarge
Sources: Argus, Fertecon CRU, ICIS, Green Markets, Mosaic.
