Market Update: Rice Competes with Corn & Soybeans for Acres
Export Demand Expected to Improve Later in 2021
After several weeks of the cash market trading sideways, it looks like slower export demand and domestic use has finally caught up. Rice prices soften in each state, albeit by minimal amounts. Rice acres are looking to be flat as corn and beans steal the show. Early guidance suggests growers will consider corn and bean acres as demand is forecast to be strong moving into the 2021 marketing year.
Export demand for US long grain rice remains suppressed as the market struggles to compete with Asian and even South American origins. The latest USDA export sales report cited total long grain demand to be down over 18% YTD.
Between sluggish demand in rice and robust demand in corn and beans, it’s no surprise that growers intend to supplant rice ground for these other commodities. Early projections are that long grain acres in Arkansas will decline by 210,000, Louisiana down 35,000, and Mississippi is forecast down 21,000. Only Texas is expected to match last year’s planted area. California acres are expected to see a sharp reduction as well, however that is not market driven, it is strictly water related. There is some potential risk for US farmers attempting to chase corn and bean prices as reports are coming in that suggest China plans to increase acreage by over 1.65 million acres in the upcoming marketing year.
With the exception of India, most of the major Asian exporters have seen few market developments over the past couple of weeks. While Vietnam is rumored to be in talks with Iraq regarding a tender, that sale has yet to come to fruition and in the meantime, Viet prices have slipped further to $505-510 per metric ton. Thailand is experiencing some market volatility as the local market reached 10-month highs on supply scarcity. Ultimately, this price action has kept many Thai exporters at bay, paving the road for India to capture additional market share.
The nearby contract closed at $12.805 per cwt in Thursday’s trading session which marks a $0.20 per cwt decline over the past 2-weeks. Volume is also down significantly, recorded at only 496 while open interest was relatively steady at 9481. With little change in pricing for the June ’22 and March ’22 contracts the board seems to be signaling that more acres aren’t needed in the market.
Missouri Rice Council Gathers in Dexter
The Missouri Rice Council and Missouri Rice Research and Merchandising Council met this week at the Gathering at Versity Crossing in Dexter, Missouri for their 38th Annual Meeting.
Mitchell Thomas, Missouri Rice Council's Chairman, welcomed approximately 75 farmers and affiliated industry members on Tuesday evening. Attendees listened attentively to the Rice Research Farm Report by Dr. Michael Aide, Professor at SEMO's Department of Agriculture, followed by an Update from the Missouri Department of Agriculture by Davin Althoff, Division Director. Lastly, Lynn Weeks, Group Leader and Market Consultant at Hurley and Associates Agri Marketing Centers gave a detailed Market Presentation before dinner which was catered by the always popular Tasteful Creations.
Washington DC Update
On Tuesday, Tom Vilsack was confirmed by the Senate for a second time as Secretary of Agriculture. With a Senate confirmation vote of 92-7 the Biden administration gains a very experienced Secretary with a depth of knowledge in agriculture issues having served as Secretary of Agriculture for eight years during the Obama administration.
Three areas that Vilsack focused on during his confirmation hearing was climate-friendly agricultural industries such as the creation of biofuels and rural biomanufacturing. Vilsack also testified about creating an “equity taskforce” inside the department to identify intentional or unintentional barriers that prevent or discourage farmers of color from properly accessing federal assistance programs. Vilsack also expressed support for SNAP (the Supplemental Nutrition Assistance Program aka food stamps) as a key instrument in helping the country’s most vulnerable families survive and recover from the pandemic era.
Also, this week the House Budget Committee passed the $1.9 Trillion pandemic relief package under reconciliation rules. It is expected to be voted on by the full House of Representatives by the end of the week. After House approval, it will be considered by the Senate where different reconciliation rules apply. It is expected that some of the provisions will be deleted.
New Horizon Ag Varieties Provide Best-In-Class Economic Returns
The highest rice yields possible or best-in-class economic returns. One is a nice “bragable.” The other is smart business. Farmers planting new Clearfield® varieties CLL16 and CLL17 from Horizon Ag in 2021 have the potential to enjoy the best of both – great yields and, most importantly, a better return on their investment.
“These new Clearfield varieties are attracting a lot of interest this season because of their potential for higher yields and milling premiums at a lower total production cost than comparable hybrids or conventional varieties,” says Dr. Tim Walker, Horizon Ag general manager. “They are game changers for farmers who understand that the story isn’t just about making good yields, it’s also about getting the most economic return at the end of the season.”
CLL16, a long grain Clearfield rice variety developed by the University of Arkansas System Division of Agriculture, has shown the potential for excellent rough rice yields, averaging higher than Diamond in university tests. Its performance consistency, high milling quality and industry-leading blast resistance make CLL16 the complete package for many rice farmers considering seed choices this season. It is also moderately resistant to Cercospora.
CLL17, a Louisiana-bred Clearfield variety, has consistently out-yielded CL153, the top-planted Louisiana variety in recent years, in multi-year trials in the state. It has solid ratoon crop potential in addition to featuring outstanding resistance to blast and Cercospora. CLL17 has also been proven to provide excellent milling yield and very good grain quality.
University and Horizon Ag tests have consistently shown CLL16 and CLL17 perform on par with leading Clearfield and FullPageä hybrids when it comes to yield potential. With their lower price tag for seed and industry leading disease resistance, however, the new Horizon Ag varieties provide farmers a chance for a higher economic return per acre.
“These Clearfield varieties offer positive step changes in yield potential relative to any rice seed available today, so for farmers who want high yields, they’re excellent choices,” says Dr. Walker. “At the same time, farmers looking for best-in-class economic returns from their fields will want to try these new varieties to see the positive overall impact on their bottom line. It’s a win-win situation.”
To learn more about new CLL16 and CLL17, as well as other Horizon Ag Clearfield and Provisia® Rice System varieties, go to www.Horizonseed.com.
House Ag Committee Updates & Subcommittee Chair Elections
There was much activity this week on the House side. The House Agriculture Committee’s Democratic Caucus organizational meeting was held and Chairman David Scott of Georgia announced the election of the Chairs of the Committee’s six Subcommittees as follows:
Jim Costa of California will Chair the Subcommittee on Livestock and Foreign Agriculture
Abigail Spanberger of Virginia will Chair the Subcommittee on Conservation and Forestry
Jahana Hayes of Connecticut will Chair the Subcommittee on Nutrition, Oversight and Department Operations
Antonio Delgado of New York will Chair the Subcommittee on Commodity Exchanges, Energy, and Credit
Cheri Bustos of Illinois will Chair the Subcommittee on General Farm Commodities and Risk Management
Stacey Plaskett of the Virgin Islands will Chair the Subcommittee on Biotechnology, Horticulture, and Research
The House Agriculture Committee’s Republican Leader Glenn “GT” Thompson (PA-15) had announced the subcommittee Ranking Members for the 117th Congress earlier and they are as follows:
Rep. Austin Scott of Georgia will serve as Ranking Member of the Subcommittee on General Farm Commodities and Risk Management.
Rep. Michelle Fischbach of Minnesota will serve as Ranking Member of the Subcommittee on Commodity Exchanges, Energy, and Credit.
Rep. Doug LaMalfa of California will serve as Ranking Member of the Subcommittee on Conservation and Forestry.
Rep. Don Bacon of Nebraska will serve as Ranking Member of the Subcommittee on Nutrition, Oversight, and Department Operations.
Rep. Dr. Jim Baird of Indiana will serve as Ranking Member of the Subcommittee on Biotechnology, Horticulture, and Research.
Rep. Dusty Johnson of South Dakota will serve as Ranking Member of the Subcommittee on Livestock and Foreign Agriculture.
On Wednesday, February 11, 2021, the House Agriculture Committee met to organize and adopt rules for the new Congress. Also on the agenda was the consideration of the Agriculture and Nutrition Title pursuant to the reconciliation instructions provided in the Fiscal Year 2021 Budget Resolution, S. Con. Res. 5. The proposal which Chairman Scott had unveiled earlier would cost $16.1 billion, and was quickly criticized by Republican Ranking Member Glenn Thompson for both the policy and the manner in which it was developed with no input from Republicans.
After consideration of amendments, the bill was adopted on a party-line vote. The only amendment adopted in a bi-partisan vote was one offered by Republican Randy Feenstra (R-IA) who authored an amendment that would extend WHIP+ to 2020 crop year and make derechos and high wind losses eligible. Cindy Axne, a Democrat from Iowa, joined Republicans to address the disaster which greatly affected Iowa producers.
The proposal will be part of the $1.9 trillion coronavirus relief bill which will be assembled by the House Budget Committee. The reconciliation proposal also contains $4.0 billion for food supply chain and agriculture pandemic response, $1 billion for nutrition assistance in Puerto Rico, American Samoa, and the Northern Mariana Islands, and $1 billion to improve land access, address heirship issues and provide legal assistance to socially disadvantaged farmers and ranchers. $800 million for Food for Peace, $1.15 billion for State’s SNAP administrative costs, and $500 million for emergency grants for rural health care.
A much-discussed provision during Committee consideration was a provision providing a payment equal to 120 percent of the outstanding indebtedness of each socially disadvantaged farmer and rancher on loans made directly by USDA or made by a private lender with a USDA loan guarantee.
Hearing Details to Confirm the Nomination of Thomas Vilsack to be Secretary of Agriculture
Major news for Agriculture this week was the hearing on the nomination of Tom Vilsack to be Secretary of Agriculture. This will be Vilsack’s 2nd appearance as Secretary of Agriculture.
On Tuesday, February 2, the Senate Committee on Agriculture, Nutrition, and Forestry held a hearing to consider the nomination of The Honorable Thomas J. Vilsack to be the Secretary of Agriculture. The hearing was meant to assess the nominee’s position on certain subjects, particularly on biofuels, climate change, awareness of federal programs, and market concentration in meat processing. Another important subject was the expectation of the Secretary to help American farmers expand into new domestic and foreign markets to increase sales of their agricultural products. Having already served as Secretary of Agriculture from 2009 to 2016, Vilsack came into the meeting highly regarded by members of the committee on both sides of the political aisle and his credentials were never questioned, allowing a productive Q&A regarding policy stances and priorities to take place throughout the hearing. In a unanimous vote, the committee advanced Tom Vilsack’s nomination as Secretary of Agriculture. Witness
The Honorable Thomas J. Vilsack – Nominee for Secretary of the Department of Agriculture – Testimony
Members in Attendance
Incoming Chairwoman Debbie Stabenow (D-MI), Sen. Amy Klobuchar (D-MN), Sen. Michael Bennet (D-CO), Sen. Sherrod Brown (D-OH), Sen. Patrick Leahy (D-VT), Sen. Robert P. Casey, Jr. (D-PA), Sen. Tina Smith (D-MN), Sen. Kirsten Gillibrand (D-NY), Incoming Ranking Member John Boozman (R-AR), Sen. Charles Grassley (R-IA), Sen. Cindy Hyde-Smith (R-MS), Sen. John Hoeven (R-ND), Sen. Joni Ernst (R-IA), Sen. Deb Fischer (R-NE), Sen. Mike Braun (R-IN), Sen. John Thune (R-SD)
The Future of Biofuels with the Emergence of Electric Vehicles
The stability and growth of the biofuel industry are of top priority for many Senators, but many feel that Biden’s policies are not aligned with this goal. Sen. Grassley, however, said he was pleased with the nomination of Vilsack to be Secretary of Agriculture, with one of the reasons being that Vilsack had a strong history of promoting biofuels domestically.
A particular concern to many Senators was the increasing presence of the electric vehicle industry in the fuel market, which some believed to be of greater priority to the Biden administration than biofuels. Sen. Ernst first asked about this shift from biofuel to electricity run vehicles and inquired about what Vilsack would do to support the biofuel industry. Vilsack answered that both industries were important and necessary. He stated that there are new opportunities to expand the role biofuels play in the fueling of planes, trucks, and ships. He also added that it needed to be acknowledged that electric vehicles will continue to be more widely used and that this presents an opportunity to use biofuels to supply that higher demand for electricity. In a follow-up question, Vilsack affirmed that millions of Americans will continue to use their older vehicles and that this older fleet of cars and the fuel they rely on will therefore not be disappearing soon.
Some Senators were worried about proper assistance not being granted to the biofuel industry throughout the Trump administration and the pandemic. After saying the Trump administration had made the wrong decisions when it came to waivers to oil companies, Sen. Klobuchar stated that 150 ethanol plants had closed around the country. She asked what Vilsack planned to do with biofuels, and Vilsack told her that he agreed that the waivers granted by the Trump administration were wrong. He said that waivers were meant to be rare and only granted to small companies, not Chevron or Exxon. When Grassley asked Vilsack on whether he would support moving some money allocated to the USDA in the CARES Act towards aiding struggling biofuel businesses, Vilsack said he’d see if money from other sources could be used to address that.
A key mission of the Department of Agriculture according to Vilsack and many Senators is to find new markets domestically and abroad. Following a question from Sen. Boozman on how he would work with the recently created Undersecretary for Trade and Agricultural Affairs and expand trade opportunities, Vilsack said that the USDA had a responsibility to maintain strong communication with the Undersecretary for two reasons. First, it is vital to have a presence, through the Undersecretary, in those export markets to make sure U.S. agriculture is front of mind for those purchasing in those markets. Second, new partnerships must be forged in foreign countries.
Sen. Stabenow wanted to know how a sense of normalcy could return to the farm economy and Vilsack’s answer involved the development of new markets and the stabilization of existing ones as well. There were three areas of expansion he mentioned. The first was completely new geographical markets such as Southeast Asia and Africa, which are due to have exploding populations in the coming years. The second focus was to grow the domestic markets by further developing a robust local and regional food system that creates market opportunities for small and midsized producers so that they can negotiate their own price. The last one, Vilsack explained, was expanding into entirely new industries such as methane capture and carbon sequestration.
The timber market was of particular concern to Sen. Hyde-Smith, who both worried about the lack of insurance programs that protected the wood industry from natural disasters and was interested in learning how the USDA could help innovation within the timber industry. Vilsack was quick to point out his previous efforts as Secretary of Agriculture to promote the construction of high-rise buildings using cross-laminated timber, saying the technology could be applied to government, specifically, Department of Defense, construction projects.
Sen. Fischer asked Vilsack about how innovation could keep the United States as a global leader in fueling and feeding the world. Vilsack responded that it would provide a significant market advantage if the U.S. became recognized for producing food sustainably. In a response to Sen. Braun, Vilsack said the U.S. was “on the cusp” of finding new markets.
Another solution proposed by Vilsack on growing markets was maximizing the ones that already exist. Sen. Brown asked Vilsack how the food supply chain could be diversified while continuing to help local medium-sized farms. Vilsack said that the flow of food products to schools, or universities, or prisons must be maximized, as well as expanding commitments to farmer's markets. Expanding assistance programs to help farmers transition into organic products and creating new meat processing facilities are also important steps to take.
Sen. Hyde-Smith followed up with concerns about a petition filed with the Department of Commerce and International Trade Commission seeking countervailing duties on phosphate fertilizers. Sen. Hyde-Smith asked Vilsack what he would do to ensure farmers have access to critical inputs. Vilsack responded saying he plans to reach out to the Department of Commerce to see what can be done to increase our competitiveness and ensure ample supply of fertilizer in the U.S. Vilsack also assured Sen. Hyde-Smith that he would see if there was anything USDA could do to directly address the issue and help farmers use inputs in the most efficient ways possible.
Market Concentration in Meat Processing Industry
With the pandemic having nearly halted the livestock processing industry, many Senators were eager to know how Vilsack would approach the high market ownership concentration of processing plants. When Sen. Hoeven voiced his concern over that market concentration, Vilsack agreed, saying that there was a need to open more because there were too few. Sen. Grassley put the situation in more concrete terms, noting that “just 4 companies control over 80% of beef processing”. In response, Vilsack said that he would speak about the issue with the Justice Department to fully understand whether anti-trust concerns should be raised. Vilsack also raised the prospect of reforming incentives at USDA to increase the number of processing facilities.
Sen. Braun also took a close look at the problem of market concentration, voicing concerns about the decline in local purchases of food supply. Vilsack again suggested consulting with the Justice Department but also mentioned involving the Federal Trade Commission or the Small Business Administration. Vilsack also mentioned how patent laws may be reformed to benefit farmers and how more money should be allocated to public research because all too often farmers have to license their innovative technology from private sources.
The Biden Administration’s pledge to address climate change issues seemed to concern many Republican members of the committee. Sen. Boozman was among those to question Vilsack on his commitment “to be a voice for the farmers and agricultural businesses”. Vilsack directly responded that he planned to commit to being both a voice for the agricultural workers and to upholding Biden’s climate pledges. There are ways to increase job opportunities in ways that combat climate change, Vilsack argued, such as through bio-based manufacturing, expanding biofuel capabilities, and carbon capture and sequestration.
In a similar vein, Sen. Hoeven asked Vilsack to respond to the demand that any efforts to expand carbon capture be “farmer-friendly.” Vilsack responded that he was aware of the concern that carbon capture programs will primarily benefit third parties. Vilsack then said those programs must primarily benefit farmers because USDA wants to encourage the adoption of such operations. He added that he believed the farm economy was ready for carbon capture.
Vilsack then answered a request from Sen. Stabenow to address the lack of technical assistance farmers are able to receive to become more climate-friendly. Vilsack described that a system, developed with the help of a farmers advisory group, must be created that makes sure conservation programs are (1) designed to incentivize the actions most environmentally valuable and (2) produce results that can be adequately measured.
Awareness of Rural Assistance Programs
Some Senators pointed out the lack of awareness and then the inconvenience of enrolling in many of USDA’s programs. Sen. Bennet, for example, was frustrated with how often rural staff must navigate the federal bureaucracy by themselves to access USDA infrastructure funding. The Senator also asked Vilsack how he would make it easier, and Vilsack responded that through partnerships with local community-building organizations, USDA had to provide the technical assistance necessary to successfully enroll in those programs. A similar answer was offered to Sen. Brown who asked a question about the awareness of the Women, Infants, and Children (WIC) program. Vilsack said that USDA was in charge of educating people of the programs it offers and that there should be a way to apply only once and enroll in multiple programs, rather than apply individually for each program, often in different offices.