USDA released its monthly supply/demand report on Tuesday (July 12). This month’s outlook for 2022/23 U.S. long-grain is for larger total supply, higher domestic use, lower exports, and larger ending stocks.
Total supply was increased as larger beginning stocks and imports more than offset lower production. Beginning stocks are 2.5 million cwt. higher this month on increased old crop (21/22) imports. Long-grain production for the 2022 crop was reduced 1.9 million cwt to 139 million on lower acreage.
The lower production estimate came as a result of 37,000 fewer harvested acres. The NASS June Acreage survey provided the basis for planted and harvested acreage adjustments this month. Long-grain imports were raised 3 million this month to a record 33.0 million cwt.
Domestic and residual use was raised 2 million to 115.0 million cwt. Exports were reduced 1.0 million cwt to 60.0 million on lower production. Long-grain exports would be the lowest since 1996. Projected 2022/23 ending stocks increased 2.6 million to 21.9 million cwt; down 12 percent from last year.
Table 1. U.S. Long-Grain Rice, Supply and Demand.
(unit: million cwt.)
|Domestic & Residual Use||118.0||113.0||115.0||+2|
|Average Farm Price ($/cwt.)||$ 13.70||$ 15.50||$ 15.50||0|
|Average Farm Price ($/bu.)||$ 6.17||$ 6.98||$ 6.98||0|
The 22/23 season-average farm price (SAFP) for long-grain is unchanged at a record $15.50 per cwt or $6.98 per bushel. Of note, the 21/22 season-average farm price was reduced 10 cents per cwt. to $13.70 or $6.17 per bushel. This would result in a Price Loss Coverage (PLC) payment of 13 cents per bushel. USDA will announce the final 21/22 season average price in October.
Following Tuesday’s report, September rice futures closed 8 ½ cents lower at $16.45. However, there was heavy, across-the-board selling in commodities and equities Tuesday. No doubt though, the significant increases in old and new crop imports were bearish to long-grain. The ’21 and ’22 marketing years are projected to see back-to-back record long-grain imports.
The September contract traded in a sideways range this week, finding support at $16.40 and resistance at $16.60. Trading was noticeably higher Friday (7/15) as the weather forecasts for the upcoming week calls for a resumption of intense heat and dryness in the Delta.
New crop basis remains firm around eastern Arkansas. Basis for August to October delivery at mills is 14 cents per bushel under futures. Basis at driers for early fall delivery is in the range of 20 to 27 cents per bushel under futures.
The chart below includes the red 20-day moving average and green 100-day moving average lines. Both sit near $16.49. A close above these moving averages to finish the week would be a supportive technical signal. The September contract hasn’t closed above the 20-day moving average since June 6. As mentioned, the near-term weather outlook is also supportive. Watch for a close above $16.60 to open additional upside.