Rice Market: Several Bearish Factors at Play, Basis Levels Steady

    ©Debra L Ferguson Stock Photography

    At the very end of what was a bearish week, Chicago rice futures turned sharply higher on Friday.  Ahead of the close, the September contract was trading 58 cents higher at one point and on track to erase all of this week’s losses.  Harvest progress is now a key focal point for the rice market.

    The current weather models indicate significant rainfall totals next week across Texas and Louisiana as well as the south Delta.  A close above the key 50 and 100-day moving averages, as well as $17, would be significant in terms of building upside momentum.

    The next resistance point would be at $17.20.

    CME September 2022 Rough Rice Futures

    CME September 2022 Rough Rice Futures. Click Image to Enlarge

    In Monday’s Crop Progress, USDA estimated the U.S. rice harvest at 11% complete for the week ending August 14th.  The only states making significant headway were in the Deep South as Louisiana and Texas had reached the halfway mark.  Harvest was just getting underway in Arkansas.

    Table 1.  Rice Harvested (%).


    Week ending

    2017 – 2021 avg.

    Aug. 14, 2022

    Aug. 7, 2022

    Aug. 14, 2021

    Arkansas 1 0 1 0
    California 0 0 0 0
    Louisiana 46 21 52 55
    Mississippi 0 0 1 1
    Missouri 0 0 0 0
    Texas 51 25 36 43
    6 States 11 5 11 11
    Source: USDA NASS

    As alluded to in the introduction, the technical aspects of the September contract were very negative for much of this week.  Tuesday’s close was below trendline support at $17.  Wednesday’s close was below the 50 and 100-day moving averages.

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    Trading was lower again Thursday on weak export sales data and the U.S. dollar posting its largest daily gain since early July.  The U.S. dollar has strengthened back to 108 and put significant pressure on most ag commodities.

    There are a number of bearish factors at play as the major grains have all struggled lately.  For one, Black Sea shipments are picking up.  Ukraine has now exported over 600,000 tons of grain since the start of the month. With decent U.S. crop prospects, traders are no longer reluctant to get short a food grain.  It appeared this week that rice had to back off too and search for demand.

    The findings in Thursday’s Export Sales were very poor and added to the negative market tone.  Total long-grain sales last week were a net 2,205 tons, with the majority (61%) sold to Canada.  The bright spot of the week was the announcement of a 44,000-ton sale of U.S. long-grain to Iraq.  This sale completed Iraq’s agreement to buy 200,000 tons from the U.S. during 2021-22.

    In the cash market, rice basis for fall delivery was steady this week.  At mills around eastern Arkansas, basis is 11 to 14 cents per bushel under September ‘22 futures.  Basis at driers ranges from 18 to 25 cents per bushel under September futures.

    On Monday (8/22), USDA-FSA is expected to release its August report of certified acres at 2:00 p.m. central.  The report can be found at this link:  FSA Crop Acreage Data.

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