Market Update: U.S. Long Grain Harvest Nears Completion

November 3, 2023
Milling yields aren’t improving as harvest is wrapping up across the South. Field yields have remained strong, but it’s taking more paddy to meet the milled specs than originally anticipated, with the head yield settling in the lower 50s. It’s still tough to say exactly where prices will settle out, but with strong export and domestic demand, it won’t take long to transfer from a harvest-driven focus to a market-driven one. Storage and drying facilities, merchants, and mills are tempering recently harvested rice in an effort to maintain quality and hopefully milling yields. Storage space in northeast Arkansas is tight and a significant amount of rice is being stored in temporary bags on the ground. Many believe there is more rice than previously reported. The Mississippi River is near an all time low level, causing barging problems.
Haiti is our largest long grain milled market and is having a significant dispute with its border nation, the Dominican Republic. The construction of a canal on the Haitian side of the Dajabon River has caused such turmoil, cross border trade between Haiti and the DR has been closed. Haiti depends on the DR for a significant amount of its food, and this dispute is putting extreme pressure on an already tenuous situation. While the DR does not provide rice to Haiti, it does provide other staples in which rice can be a substitute. More to develop on this situation, but we may see a further increase of shipments to Haiti beyond the 28 TMT increase year over year we already have on the books.
In Asia, the big news is the augmented demand from Indonesia. We referenced it last week, but the implications have made its way through the market. Indonesia is the fourth largest consumer of rice in the world, and their quadrupling of imports on account of the El Niño and climate risk is putting pressure on an already tight market. With India out of the export market, Vietnam and Thailand have picked up the slack thus far. However, there is still room for a either a G2G transaction with India, or it’s possible China may come to the aid of BULOG, Indonesia’s purchasing arm. It’s important to note that of global stocks are now pegged at 167 MMT, and China accounts for 103 MMT, or just over 60%. China would have no problem committing to the volume if it becomes entirely necessary.
These factors force the global market to run up against a severe timing issue. India is expected to keep their export ban in place until at least the end of Q1 2024. All the while, they are building stocks at a rate much quicker than normal, which could result in a glut of available rice sometime after March 2024. While making a marketing plan based on the current fickleness of India’s rice availability has proven dangerous, waiting for them to unwind the ban could also prove catastrophic. This leaves prices in Vietnam at $630 pmt, nearly $40 premium to Thai prices at $585 pmt. The table is set for firm pricing through the end of this calendar year and into the first part of next, but all bets are off after that.
Prices in the Western Hemisphere are holding steady on account of global events as well, with U.S. export quotes remaining at $760 pmt. Uruguayan quotes rose as high as $750 pmt on tightened supplies, making U.S. the preferred supplier until the full harvest commences in March in the Southern Hemisphere. The numbers speak for themselves early this marketing year, as Long Grain milled export sales are up 46% vs. 2022 on strong business Iraq, Mexico, and Haiti. Long Grain rough numbers have buoyed 160% this year compared to last, with huge sales to Mexico, and strong demand from Nicaragua, El Salvador, Venezuela, and Ecuador.  
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