Rice Market: Widening Spread in Sep/Nov Futures Spread

    ©Debra L Ferguson Stock Photography

    This week we’ll shift our attention to November rice futures.  Over the past week, open interest has been evaporating fast in the September contract.  This exit is typical in the few weeks ahead of First Notice Day.

    For the September contract, First Notice Day is next Wednesday, August 31.  To avoid taking physical delivery of a commodity, a trader needs to be out of a long (buy) position by the close of the day prior to First Notice Day.

    It’s interesting to compare the price trends in the September and November contracts over the past 90 days.  In the graph below, the top, red line represents the November contract and the bottom, black line is the September contract.  The vertical distance between these two lines is typically referred to as the “spread” or some use the term “carry”.

    CME Rough Rice Futures, Sept. 2022 and Nov. 2022, Three-month daily chart

    CME Rough Rice Futures, Sept. 2022 and Nov. 2022, Three-month daily chart. Click Image to Enlarge

    Note the Sept/Nov spread in late May was a narrow 7 cents.  Today the spread has expanded out to 36 cents.  Although not to the extent seen today in the Sept/Nov, there is “carry” in the rice futures market out to May 2023 with the May contract currently trading near $18.10.  The message here is, a positive month-to-month futures spread can encourage growers to defer delivery, so long as there’s a return to storage.

    The widening separation in the Sept/Nov spread reflects the monthly increases in USDA’s ending stocks projections and a market becoming more comfortable with the supply outlook.  Since May, USDA’s projection for new crop long-grain ending stocks has ballooned by 5.4 million, from 18.3 to 23.7 million cwt.  Practically all the increase is due to imports and old crop carry-in.

    Also, with the November contract becoming the lead month, we’ve seen basis for the August to October delivery slot weaken by about 10 cents per bushel over the past week.  For August to October delivery, basis at mills is around 23 cents per bushel under November futures.  Mill bids Friday morning were near $7.70.

    Basis at driers ranged this week from 29 to 36 cents per bushel under November, with bids Friday in the $7.56 to $7.63 range.  Basis for more deferred delivery is much stronger. For example, basis is currently 5 cents per bushel over futures for January to March delivery to mills and 2 cents under futures for delivery to some drier locations.

    Harvest Progress:

    In Monday’s Crop Progress, USDA estimated the U.S. rice harvest at 15% complete for the week ending August 21st, up from 11% the prior week.  Ahead of this week’s rains, Louisiana and Texas had harvested 60 and 66% respectively.  Arkansas was at 2% percent harvested and on pace with the 5-year average.

    The Midsouth delta counties are expected to see low rainfall totals early next week (less than half an inch), with current model runs predicting the best rain chances Sunday thru Tuesday.  Weekly rainfall totals increase into Louisiana and along the Texas gulf coast.  As of Friday (8/25) there were no well-organized tropical systems moving into the Gulf of Mexico.

    Table 1.  Rice Harvested (%).


    Week ending

    2017 – 2021 avg.

    Aug. 21, 2022

    Aug. 14, 2022

    Aug. 21, 2021

    Arkansas 2 1 2 2
    California 0 0 0 0
    Louisiana 60 46 61 66
    Mississippi 0 0 2 4
    Missouri 0 0 0 0
    Texas 66 51 49 59
    6 States 15 11 14 15
    Source: USDA NASS

     FSA Crop Acreage:

    On Monday (8/22), USDA’s Farm Service Agency released its August Crop Acreage file.  As always, there is a lot to digest in this information.  Focusing on Arkansas, growers have reported 993,340 planted acres of long-grain.  Planted acres do not include failed acres or prevented planting.

    For comparison, NASS’ June forecast for Arkansas long-grain was 1.04 million harvested acres.  Medium and short grain acres reported to FSA were 89,786 compared to NASS’ June forecast of 96,000 acres.  Total rice acres currently stand at 1,083,125 against the NASS June forecast of 1.136 million harvested.

    Table 2.  2022 Arkansas Rice Acres.

    Planted Acres* Reported to Farm Service Agency and NASS Harvested Acres Forecast.

    unit:  acres




    % Difference


    June 30

    Long-Grain 993,340 1,040,000 -46,660 -4.5%
    Medium and Short Grain 89,786 96,000 -6,214 -6.5%
    U.S. Total 1,083,125 1,136,000 -52,875 -4.7%
    Totals may not add due to rounding.

    * Planted Acres do not include Failed Acres or Prevented Planting.

    Source: USDA Farm Service Agency and USDA NASS.

     The following table includes total rice acreage by county.  As of August 22, rice acreage had been certified in 40 counties.  The top 20 counties grow 92% of the total acres.

    Table 3.  Arkansas Rice Acres* Reported to FSA, August 22, 2022.






    1 Lonoke 84,129 21 Chicot 18,107
    2 Jackson 83,968 22 Lee 12,648
    3 Poinsett 81,464 23 Drew 10,267
    4 Lawrence 75,965 24 Independence 8,904
    5 Arkansas 65,521 25 Miller 6,216
    6 Clay 62,199 26 White 6,086
    7 Greene 55,228 27 Lafayette 5,439
    8 Jefferson 55,079 28 Pulaski 5,226
    9 Cross 54,203 29 Ashley 4,563
    10 Prairie 50,771 30 Clark 3,700
    11 Craighead 50,276 31 Pope 2,362
    12 Woodruff 46,711 32 Faulkner 2,070
    13 Mississippi 42,934 33 Conway 1,199
    14 Monroe 40,859 34 Perry 903
    15 Crittenden 29,139 35 Hot Spring 701
    16 Randolph 28,629 36 Yell 661
    17 St. Francis 26,572 37 Little River 546
    18 Phillips 20,866 38 Logan 353
    19 Lincoln 20,060 39 Franklin 97
    20 Desha 18,447 40 Johnson 59
            TOTAL 1,083,126
    * Planted acres excluding failed acres and prevented planting.
    source: USDA Farm Service Agency, August 2022.

     At the national level, we found it interesting that over the past five years, August “planted” acres reported to FSA, are remarkably close to NASS’ final harvested acres.  Note that NASS uses FSA planted acreage data to complement their survey data.

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    The table below provides a comparison of NASS’ final long-grain harvested acres and August planted acres reported to FSA.  In 2020, COVID-19 complicated reporting to county FSA offices, creating abnormal delays.

    Excluding 2020, in four of the last five years the August planted acres reported to FSA have been within roughly 2,100 acres or one-tenth of one percent (.1%) of NASS’ final harvested acres.

    Table 4.  U.S. Long-Grain Rice Acres, 2017-2021.





    % Difference


    final harvested acres




    2017 1,748,000 1,746,342 (1,658) -0.1%
    2018 2,176,000 2,173,071 (2,929) -0.1%
    2019 1,730,000 1,727,868 (2,132) -0.1%
    2020 2,301,000 2,185,069 (115,931) -5.0%
    2021 1,936,000 1,934,146 (1,854) -0.1%
    * planted acres – excludes failed acres and prevented planting.
    Source: USDA NASS and USDA Farm Service Agency.

    What might this mean?  It could imply that FSA’s August 2022 long-grain planted acres of 1.786 million (shown in table below) are very close, perhaps within 2,100 acres, of this year’s harvested total.  Generally, there isn’t a great deal of change from the August to the final FSA certified acres.  In recent years, almost 99% of the final rice acreage is in the August reporting.

    Table 5.  2022 U.S. Long-Grain Rice Acres.

    Planted Acres* Reported to Farm Service Agency and NASS Harvested Acres Forecast.

    unit: (1000) acres




    % Difference


    June 30

    Arkansas 993 1,040 -47 -5%
    California 6 5 1 20%
    Louisiana 367 385 -18 -5%
    Mississippi 85 98 -13 -13%
    Missouri 148 180 -32 -18%
    Texas 188 170 18 11%
    U.S. Total 1,786 1,878 -92 -5%
    * Planted Acres do not include Failed Acres or Prevented Planting.

    Source: USDA Farm Service Agency, August 2022.

     By comparison, NASS forecast long-grain harvested acres at 1.878 million in June.  Using recent history as a guide, in 6 of the last 8 years NASS’ June harvested acreage forecast for long-grain has been higher than the final harvested acres.  We acknowledge FSA’s numbers are preliminary, however it is interesting that long-grain acreage reported in August is 92,000 acres below NASS’ June 30 harvested acres forecast.

    Exploring possibilities, assume NASS’ forecast for long-grain harvested acres is reduced by 90,000 acres.  Holding the current yield forecast of 7,471 pounds constant, that could remove 6.7 million cwt. of production.  With no changes to demand, ending stocks fall to 17 million cwt.  The long-grain balance sheet would then look very much like it did in 2019/20, when we saw historically high prices in the first half of 2020.

    The August report is the first of five (5) updates to FSA’s acreage information.  This will be interesting to track as it has deep implications for 2022 production adjustments.  Scheduled releases of FSA’s acreage reports are as follows:

    • Sep 12
    • Oct 12
    • Nov 9
    • Dec 9
    • Jan 2023 TBD

    Data for all crops, states, and counties are reported in the following categories: planted; prevented planting; and failed. The August dataset is available at this link 2022 acreage data as of August 22, 2022.

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