Market Update: New Crop Planting in Texas; Louisiana Begins in One Month

The market is moving steadily along, which is a comfort to most involved. There was a nice bit of milled business to Haiti that was booked this week, as any business to this destination can no longer be taken for granted. What now seems to be the expectation is a strong domestic market that keeps the mills churning, and paddy prices firm for the time being. Recall that there have been two short crops, and this supply shock has resulted in high prices for farmers and exporters — but largely to the detriment of the ability to be price competitive.

Just this week, there is talk beginning to surface of a rebound in rice acres, albeit the discussion includes more medium grain acres as well. Farmers in the largest producing state of Arkansas are indicating a slight increase over last year. Remember last year U.S. production was the lowest in 30 years. New crop planting in Texas and south Louisiana will begin in late February, weather permitting. More acres would be welcome to the industry as a whole, and the hope would be to find pricing that would get some of our core markets back in Mexico and Central America. Easier said than done given domestic market conditions. However, with Brazil and other origins in the Mercosur region considerably below current U.S. long grain prices, there is a long way to go for price competitiveness to be a factor, not to mention quality issues. One thing to note is a prolonged drought that is plaguing rice production, particularly in Argentina, and to some degree in both Brazil and Uruguay. River levels have fallen significantly and reservoirs are almost exhausted. Several local analysts feel some rice will be lost while hoping that forecasted rains will be a reality. If not, the crop will be hurt. Only Paraguay, which has harvested close to 20%, is having a largely normal crop. Yields are reported at 8,000 lbs per acre. As most Mercosur relies on surface water, those areas that have close to normal water supplies will have high yields and may offset losses. The extent remains to be seen but could certainly have an impact on price perspectives in the coming marketing year and the firmness of the Mercosur market.

A GAIN report published in China this week forecasted lower rice imports with a smaller production of 2%, down to 146 MMT on account of drought in the mid and late-season crops. The lower rice imports can in part be credited to not bringing in as many brokens from India as a corn substitute for feed because of their export situation, resulting in a drop of 300,000 MT down to 5.2 MMT. 5.2 MMT is a staggering number for imports but pales in comparison to the 5.7 MMT of rice imported through November 2022. 

In the rest of Asia, we have seen a consistent week with prices holding firm; Thai prices are unchanged from last week at $495 pmt, and Viet prices are unchanged at $455 pmt. The lack of price movement can be attributed to the Chinese New Year, as most are focused on the celebration. This will be the case through the first week of February.

The weekly USDA export sales report shows net sales of 42,700 MT this week, primarily for Japan (13,000 MT), Haiti (12,000 MT), Mexico (6,500 MT), El Salvador (5,600 MT), and Saudi Arabia (2,500 MT). Exports of 66,900 MT -- a marketing-year high -- were up noticeably from the previous week and from the prior four-week average. The destinations were primarily to Panama (27,500 MT), Honduras (15,600 MT), the United Kingdom (10,600 MT), Mexico (5,600 MT), and Jordan (3,900 MT). Results of the recently conducted Colombia-U.S. auction under the Free Trade Agreement will be released on January 31 after successful bidders have paid in full for their awards. Both paddy and milled rice has been awarded totaling 89,000+ tons milled basis.

In This Issue:

  • Market Update: New Crop Planting in Texas; Louisiana Begins in One Month
  • Washington, D.C. Update
  • USRPA Travels to Guatemala
  • 2023 South Texas Rice Symposium
  • Join us for Denim & Diamonds on February 11
  • 2023 Rice Market & Technology Convention
  • Photo from Rice Country
On January 18th, the 2023 Western Rice Belt Conference gathered over 300 farmers at El Campo Civic Center. It was a great setting for rice producers and rice industry professionals to get together to hear presentations from the professionals and leaders in the agriculture industry. Among the speakers were Texas Rice Council President, Tommy Turner who gave an update on Texas Rice Council's accomplishments and future activities, and Galen Franz, who gave an update on the Texas Rice Research Foundation.
Republican Steering Committee selects members of the House Committee on Agriculture for the 118th Congress  
On Monday, January 16, the House Republican Steering Committee selected the Republican members who will serve on the House Agriculture Committee for the 118th Congress. The returning members selected to serve on the Committee include:
Rep. Glenn "GT" Thompson (PA-15)Chairman,
Rep. Austin Scott (GA-08)
Rep. Scott DesJarlais (TN-04)
Rep. Doug LaMalfa (CA-01)
Rep. David Rouzer (NC-07)
Rep. Trent Kelly (MS-01)
Rep. Don Bacon (NE-02)
Rep. Dusty Johnson (SD-At Large)
Rep. Jim Baird (IN-04)
Rep. Tracey Mann (KS-01)
Rep. Mary Miller (IL-15)
Rep. Barry Moore (AL-02)
Rep. Kat Cammack (FL-03)
Rep. Brad Finstad (MN-01)  

The new members selected to serve on the Committee include
Rep. Frank Lucas (OK-03)
Rep. John Rose (TN-06)
Rep. Ronny Jackson (TX-13)
Rep. Mark Alford (MO-04)
Rep. Lori Chavez-DeRemer (OR-05)
Rep. Monica De La Cruz (TX-15)
Rep. John Duarte (CA-13)
Rep. Nick Langworthy (NY-23)
Rep. Max Miller (OH-07)
Rep. Marc Molinaro (NY-19)
Rep. Zach Nunn (IA-03)
Rep. Derrick Van Orden (WI-03)  

Secretary Vilsack comments on the upcoming farm bill  
Agriculture Secretary Tom Vilsack expressed that he wants the next farm bill to include reforms for disaster relief and focus more on farmers who haven’t done as well financially in recent years. Secretary Vilsack said that existing disaster programs are not designed for addressing varying regional needs or cover damage from unusual storms. He also announced a new round of assistance under the temporary Emergency Relief Program USDA created with $10 billion in ad hoc disaster funding authorized last year for losses in 2020 and 2021. 
 
Chairman Thompson hosts farm bill listening session
On January 13, House Agriculture Chairman GT Thompson (R-PA) hosted a listening session at the Pennsylvania Farm Show. He was joined by Reps. Chellie Pingree (D-ME), Austin Scott (R-GA), Doug LaMalfa (R-CA), Dwight Evans (D-PA), Dan Meuser (R-PA), Mary Miller (R-IL), Mark Alford (R-MO), and Derrick Van Orden (R-WI) to receive stakeholder from members of the agricultural community as they prepare for the upcoming farm bill.
Planting intentions are officially on the minds of rice producers and the “holiday fog” is lifting off the market. To begin, an unprecedented offer for medium grain surfaced last week, where one of the larger coops in the south procured approximately 60,000 acres of medium grain at prices in the $20/cwt range. This is a very rare occurrence indeed, and it now appears that medium grain seed will be the constraining factor for more growth in acreage. The move to medium grain would make sense for growers in the South, especially when considering the enormous reduction in California production this year, and the resulting record pricing in excess of $1,600 pmt that Calrose has experienced. A spike in medium grain acres in the South is to be expected though, as the ERS Rice Outlook points out that last year only 398,000 total acres of medium and short grain were harvested in the U.S. This is 28% fewer MG/SG acres than the previous year, and the lowest since at least 1972/73. Read more here.  

The long grain market continues to be a head-scratcher; export demand remains low while prices are high. The high prices are on account of a short crop, but when compared to other origins, U.S. rice is well over $200 pmt higher than its competitors. We reported last week the excellent news of an additional 44,000 metric tons of business to Iraq, and the significance can’t be understated when the country could have sourced that rice from Thailand at prices closer to $500 pmt. All this to say, the export business is more than welcomed and helps complement a steady core of the domestic business that has held the market firm all year. We eagerly await more news on planting intentions in the coming weeks as producers evaluate bean and corn prices, and how those will work into crop rotations this year.  

In Asia, Thai and Viet prices have officially separated from Indian prices. This is the result of strong demand in the new calendar year, available supplies, and currency fluctuations. But one thing we expect is to see these bifurcated markets converge a bit more in the coming weeks and months. Expect to see the Indian prices creep up from their current levels just below $400 pmt, or Viet and Thai prices soften from their current levels of $455 pmt and $495 pmt, respectively.  

We will turn now to Brazil, the emerging and most significant threat to the Mexico and Central American markets. A report published this week by ABIARROZ, the Brazilian rice organization, highlights that milled exports have returned to pre-pandemic levels in volume, and have surpassed those levels in value. Milled rice accounted for 52.4% of total rice exports in value, a drop from previous years, but paddy rice exports reached their highest levels both in volume and value, respectively 98% and 75% higher than average. Reports of drought in the region will certainly impact production and exportable supply, but will nonetheless have an impact on the U.S. long-grain complex.  

As mentioned in last week’s RA, the long grain trade is looking towards the results of the Colombian tender on January 23 that calls for 89,779 tons (milled basis) or the equivalent in paddy. This result will be a good measuring stick for where the US export outlook.

In This Issue:

  • Market Update: How Many Rice Acres in 2023?
  • Washington, D.C. Update
  • 2023 Western Rice Belt Conference
  • Join us for Denim & Diamonds on February 11
  • 2023 Rice Market & Technology Convention
  • Photo from Rice Country

There is a new year upon us, but there has been little change in the rice market — and that’s not a bad thing. The assumptions that the industry has been working with on a short crop and lower yields have been finalized in several USDA reports that we highlight below. The domestic business has held steady, and the new year was greeted with a perk from Iraq and their announcement to procure an additional 44,000 metric tons. This will help exports get back on track, as the numbers have been dismal so far this marketing year because of the difficult — albeit recovering —a situation in Haiti.

The most recent WASDE report published on January 12 offers an outlook for the U.S. that calls for smaller supplies, higher domestic use, decreased exports, and lower ending stocks. The Crop Production Summary report for rice provides the evidence, citing that rice production in 2022 totaled 160 million cwt, down 16% from 2021. Planted area for 2022 was 2.22 million acres, down 12% from 2021. The area harvested was down 13% from last year, registering at 2.17 million acres. The average yield for all U.S. rice was estimated at 7,383 pounds/acre, down 4% from last year. None of this comes as a surprise to the industry, but these numbers are confirmation.

Turning to the global outlook from the WASDE, we see the opposite taking place with larger supplies available, reduced consumption overall, and increased trade, all resulting in higher ending stocks this month. All of these totals represent minor changes in the global complex, but nonetheless highlight a changing dynamic in China, India, the Philippines, and Pakistan.

The Rice Stocks report, also published on January 12, shows that rough rice stocks in all positions on December 1, 2022 totaled 106 million cwt, down 17% from the same time last year. On-farm stocks totaled 29.7 million cwt, and off-farm stocks were the remaining 76.1 million cwt. Long Grain varieties account for 72% of stocks, while medium grain accounted for 26%, and the remainder of 2% is for short grain varieties. This report helps provide support for the high price of U.S. rice. All eyes will be on the results of the January 23 tender in Colombia for U.S. rice under the Free Trade Agreement that calls for 89,779 tons milled basis and a shipment period of February 1 – June 30.

The biggest news out of Mexico is the government’s announcement on January 6 declaring the exemption of all import duties on food imports including rice in all forms as part of an effort to control food inflation. The decree, “Comunicado No. 001” states this anti-inflationary measure will remain in effect until December 31, 2023. We understand other Latin American governments are in similar policy discussions. Read more here.

In the Mercosur, Paraguay began harvesting the first fields last week. Brazilian buyers have been aggressively buying in the neighboring markets. The Mercosur countries are largely sold out of rough rice except for Brazil’s limited volume priced approximately at $415-$420/ton FOB. The trade also reports a sale of 60,000 tons of milled rice to Iraq out of Argentina and Uruguay in 50 kilo bags for March & April shipments of 30,000 tons each. Prices are reported at $565-$575.

Turning to Asia, prices have held steady in India at prices just below $400 pmt, and steady in Vietnam as well as prices around $455pmt. However, there was an increase in Thai prices up to the $490 pmt price point, largely on account of strong demand surfacing at the start of the year.

The weekly USDA Export Sales report shows net sales of 62,700 MT, up 29% from the four-week average and up noticeably from last week. Increases were primarily for South Korea (34,100 MT), Haiti (13,400 MT, including decreases of 3,600 MT), Jordan (8,000 MT), Honduras (5,100 MT), and Mexico (900 MT). Exports of 20,500 MT were down 59% from last week and 44% from the prior 4-week average. The destinations were primarily Haiti (15,100 MT), Mexico (2,200 MT), Canada (1,500 MT), Saudi Arabia (500 MT), and South Korea (400 MT).

Next week we will delve more deeply into intentions for new crop planting in the U.S., as those decisions are being made right now.

Marine vessel Ernst Oldendorff loading 27,500 tons of rough rice for Panama as a result of the November 2022 tender. Congratulations to the South Louisiana Rail Facility on their first time sale to this market.

Omnibus appropriations package includes assistance for rice producers

On December 29, President Biden signed into law an omnibus funding package for the fiscal year 2023. Included in this package was $250 million in assistance for rice farmers to offset the impacts of high input costs and relatively small increases in the market price for rice. This provision, championed by the Senate Agriculture Committee Ranking Member John Boozman (R-AR), will be delivered as a one-time payment. The amount producers receive will be a function of a payment rate set by the Secretary of Agriculture, individual APH or area yield for 2022, and certified rice acres for 2022 (both planted and prevented from being planted). For rice acreage where prevent planting indemnities were paid for 2022, impacted acres will be eligible for 55% of the payment. If those acres were replanted to a different insured crop, impacted acres will be eligible for 35% of the payment. There will be a payment limit of $250,000 if 75% or more of a producer’s adjusted gross income is derived from farming and $125,000 if less than 75% of a producer’s adjusted gross income is derived from farming. The full text of the omnibus package can be found here. The section on assistance for rice producers begins on page 3977.

Jason Smith elected Chairman of Ways & Means Committee

On January 12, Rep. Jason Smith (R-MO) was elected Chairman of the House Ways & Means Committee for the 118th Congress. Rep. Smith represents the rice-producing district in the southeastern corner of Missouri. He has served on the Ways & Means Committee since the 114th Congress.

Sen. Stabenow announces upcoming retirement

On January 5, Sen. Debbie Stabenow (D-MI) announced that she would not seek reelection in 2024. Sen. Stabenow currently serves as the Chair of the Senate Committee on Agriculture, Nutrition, and Forestry, and also Chairs the Democratic Policy and Communications Committee. Sen. Stabenow’s official date of retirement will be January 5, 2025.

EPA and the Army Corps of Engineers release new rule defining WOTUS

On December 30, the U.S. Environmental Protection Agency (EPA) and the Army Corps of Engineers announced the final “Revised Definition of ‘Waters of the United States’” rule which will be effective 60 days after it is published in the Federal Register. The new rule defining “waters of the United States” or WOTUS, under the Clean Water Act, trims back an exclusion for prior converted cropland that had been in the Trump administration’s Navigable Waters Protection Rule. Although the new rule has been released, it may be short-lived pending the outcome of the Supreme Court’s current case on WOTUS, Sackett v. EPA.

Alexis Taylor and Doug McKalip confirmed by Senate for top agriculture trade posts

In the final hours of the 117th Congress, the Senate confirmed the nomination of Alexis Taylor to be the United States Department of Agriculture (USDA) Under Secretary for Trade and Foreign Agricultural Affairs, and Doug McKalip to serve as Chief Ag Negotiator within the Office of the United States Trade Representative. The Biden Administration originally announced its intent to nominate Taylor and McKalip in early 2022, and their confirmation comes after months of agricultural industry concern over the Administration filling top agricultural trade roles.

The Mexican Department of Agriculture – SIAP, reported on December 13, 2022, that until October 31, 2022, in the Spring-Summer cycle, 19% or 4,174 of the total planted rice hectares, have been harvested obtaining 38,945 MT of paddy rice, which will yield 25,626 MT of white rice.

Until this date, production by state in this Spring-Summer Cycle is as follows:

Veracruz – 59% or 23,004 MT – paddy rice

Morelos – 24% or 9,233 MT - paddy rice

Tabasco – 7% or 2,797 MT – paddy rice

Nayarit – 4%. or 1,434 MT – paddy rice

Rest of the states – 6% or 2,478 MT of paddy rice

The price paid to producers in Mexico at the field in October 2022, is reported at US$275 per MT, 7% higher than in September 2022, and 4.3% lower than the prices paid in October 2021. The wholesale reference price is US$1.05 per kilogram, 6.9% higher than in September 2022, and 30.3% higher than in October 2021. Consumer price is reported at US$1.70 per kilogram, 4.6% higher than in September 2022 and 4.5% higher than in October 2021.

Planting intention for the 2023 Fall-Winter cycle is being reported at 15,391 hectares, expecting production of 109,159 MT of paddy rice, which should yield 71 thousand MT of white rice.

SIAP informed that for the 2022/2023 commercial year:

  • Production expected is 158 thousand MT of white rice, 7.8% shorter than the previous CY.
  • Imports are expected to reach 1.048 million MT
  • Consumption is expected at 1.187 million MT
  • Exports are expected to reach 8 thousand MT
  • Carryover by September 2023, is estimated at 110 thousand MT, just enough for 1.1 months of supply
Source: SIAP

IMPORTS

SIAP also reported that for the third consecutive month, rice imports exceeded 100 thousand MT accumulating 976 thousand MT until October 2022, representing an increase of 14.3% year over year. October imports reached 139,412 MT, 78 thousand MT more than in the same month in 2021, and 47 thousand MT more compared with the monthly average of 93 thousand MT.

According to the SIAP report, in October 2021, the United States, Uruguay, and Argentina were the main rice suppliers, however, this year, the Mexican President’s anti-inflation measures and the international context, have modified the import origins scenario, thus imports in October 2022, have come from Brazil with 88 thousand MT, Paraguay 28 thousand MT, and the United States 15 thousand MT.

Source: SIAP
Top Instagram Posts from USRPA's Moroccan Promotional Campaign

USRPA’s influencer campaign was successfully completed in North Africa, with great results in terms of impressions, engagement, and reach.

Below metrics and results from the campaign:

  • Number of influencers: 3
  • Number of feed posts published: 6
  • Number of Instagram stories: 42
  • Top target country: Morocco (94%)
  • Impressions: 3.8 million
  • Top interactive content: video/recipes
  • Engagement (reactions, comments, shares): 9,000
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