Market Update: Need for a New Farm Bill Gaining Attention

November 22, 2024
The market on the ground is relatively unchanged from last week — and the last several weeks for that matter. What is happening now though, is a large contingent of agricultural groups have descended on Washington, D.C. in hopes of getting a 1-year reauthorization of the Farm Bill with improvements to Title 1 and Title 11 (crop insurance), as well as an extension on all other titles. The goal will then be to write a new 5-year bill with an increased baseline. That is the plan as of this writing, but more to develop on this front. Rice and all other commodity groups are in desperate need of a modernized farm bill to assist in the current production and marketing environment. Read more about the situation in the Washington, D.C. Update below.

In light of a global situation that continues to be dominated by India’s release of its rice supplies, it feels like a literal race to secure demand before the price drops further. It is not a good situation for any seller/exporter, which in turn creates a great buyer’s market. In light of that, there are some important developments to discuss in South America that will have a material impact on our current marketing efforts in the coming weeks, as our quality is suffering this year… again.

We have mentioned in previous reports that not only is our Haitian market in limbo because of the political violence there, but also because Pakistan is making inroads at significantly lower prices than we can offer. This started as a short-term, stop-gap solution for Haiti, but now with Pakistan’s large crop, exportable surplus, and competition from India, the Haitian milled market is not guaranteed to return to its normal volume as it was once thought. There is still a strong foothold and demand for U.S. rice — make no mistake about it — but Pakistan has a toehold and won’t let go without a fight. Add the fact that the security situation is not improving but worsening (at least this week), it remains to be seen how and when some measure of any stability will occur.

In Argentina, supply this year is also expected to be up 10% from USDA projections. This normally wouldn’t be a significant factor, but with all that’s happening in the rice export market, it’s one more chit to tip the scale in the wrong direction. It is possible that weather patterns won’t materialize as expected and a dry cycle will take out some acreage, but not enough to result in a below-average crop. The overall outlook for new crops in neighboring Brazil, Uruguay, and Paraguay is promising, assuming the weather continues to support. A significant increase in production is predicted and harvest should begin before New Year’s.

To summarize the global pricing matrix, India and Pakistan are duking it out at $450 pmt, while Thailand is on the bubble at $500 pmt, and Vietnam is holding closer to $530 pmt. In the Western Hemisphere, prices are much higher, but with such a spread, the strength of freight advantages may weaken. Uruguay and Argentina are reported at $700 pmt, with Brazil reported in the $750 pmt range, and the United States on top at $800 pmt. Even being the highest-priced rice in the matrix, growers still aren’t breaking even. It is a strange year indeed, but with the hope that a new administration may be open to resourcing Cuba with basic foodstuffs and supplies, there may be a bright spot on the horizon.

The weekly USDA Export Sales report shows net sales of 68,900 MT, down 38% from the previous week, but up 6% from the prior 4-week average. Exports of 36,800 MT were down 30% from the previous week and 40% from the prior 4-week average. 
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