FSA announces second payment through the Rice Production ProgramLast Friday, the USDA Farm Service Agency (FSA) announced that eligible rice producers who received an initial program payment through the Rice Production Program would receive an additional payment of .28 cent per pound. Recipients will not be required to submit a new application and payments will be determined on previously reported data. The Consolidated Appropriations Act of 2023 provided USDA with the authority and funding to provide up to $250 million in assistance to rice producers to counter stagnant prices and high input costs during the 2022 crop year. Earlier this year, FSA provided payments to producers totaling $195 million under a payment rate of 1 cent per pound. House considers agriculture appropriations bill amendments this week, the full House considered the appropriations bill for USDA and the Food and Drug Administration for fiscal year 2024. The House considered and adopted amendments to the bill, many of which further reduced spending in the bill. Final passage of the bill is uncertain at this time due to concerns from members on the bill’s overall reduced spending levels and inclusion of a policy related to mifepristone. The current fiscal year concludes on September 30 and barring passage of a continuing resolution by both chambers, a government shutdown will commence on October 1. As of Thursday afternoon, the Senate has introduced and moved forward with procedural steps on a continuing resolution to fund the government through November 17. While proposals for a continuing resolution have been introduced in the House, the chamber has yet to consider any legislation to fund the government for the short term.

Organized by the US Rice Producers Association, five rice mills from Ecuador and three government officials spent a week in the Mississippi River Delta from St. Louis to New Orleans, visiting every aspect of the U.S. rice trade. The purpose of the trip was to gain a solid understanding of how rice is grown and handled from the field to an ocean vessel for export. The last time Ecuador imported rough rice from the United States was in 1997 due to an El Niño weather phenomenon. Since that year Ecuador has been self-sufficient in rice and most years have had a surplus that could be exported to neighboring markets. Due to a long-time relationship between the USRPA and Ecuador’s CORPCOM (Corporacion de Industriales Arroceros del Ecuador), the national rice millers organization, the two groups began discussions earlier in the year about the market and the supply/demand issues in the Western Hemisphere. Aware of meetings in Ecuador between the rice mills, producers, and the Ministry of Agriculture, the USRPA invited CORPCOM members and government officials. After 1997 Ecuador had not been involved in the rice trade outside of their country. That year the population totaled 11 million but today the population has grown to 18 million, putting increased pressure on production where average yields are 5,500 pounds per acre. The visit to the delta by five mills and two government officials was an overwhelming success as noted by their comments. “Thank you for all your attention, you made a week of work like a vacation, meeting great people and professionals.” “Thank you very much for organizing and sharing your experience and knowledge with us, an enriching trip." ”You made us feel as if we were at home and we could verify every step in the process chain of rice, where we could resolve our concerns.”

A glimpse of harvest and a conversation with Justin and Landon Wheeler at Wheeler Farms near Grayridge, MO.

A market presentation at Bunge headquarters in St. Louis kicked off the week.

The group met with USDA - Federal Grain Inspection Service staff in Stuttgart, AR.

Thanks to Dr. Jarrod Hardke and his team at the Arkansas Rice Research and Extension Center for hosting the group for lunch.

TRC Group and Russell Marine Group hosted a grading workshop for the group.

A river tour and export logistics discussion with Russell Marine Group in New Orleans.

Milling yields are the only thing that’s lacking this harvest. We are ahead of pace, up on acres, and up on yields almost across the board, but converting the ample paddy supply to an ample milled product is proving more difficult than anticipated. While this isn’t a huge surprise to anyone because of the excessive heat at key times throughout the growing season, it’s about the only negative we can cite at the moment — which is a net positive! Export prices are competitive with South American origins, and we are largely isolated from any negative impacts of the Indian export bans. In actuality, we are a beneficiary because Iraq took swift action to book milled rice from the U.S., and mills are busy through the end of the year filling that business. Last year all we could report was the doom and gloom of negative food policies foreign governments were taking to combat raging food inflation to the detriment of our U.S. long grain crop. This year represents a new opportunity, in which we will be a featured and stable supplier of long grain rice. Let’s just hope the milling yields improve, as this will be the year we can gain some of our market share back from our drought-stricken South American competitors, namely Brazil. On the ground, prices in Texas are holding at $17.60/cwt, while Louisiana is at $16.50/cwt. Mississippi, Arkansas, and Missouri are in the $15.75/cwt range. The futures market is also firming up a bit, 2%+ increases from Nov '23 thru Jul ’24, with Jul ’24 registering as high as $17.020. Average daily volume jumped 14.86% up to 436, while open interest held steady at 10,839 this week. The USDA crop progress report shows the entire complex at 66% complete, 7% above the 5-year average. Louisiana is leading the charge with 95% complete, followed by Texas at 92%, Mississippi at 90%, Arkansas at 70%, Missouri at 53%, and California at 10%. Arkansas is 1% ahead of last year, and California is 8% behind last year.  In Asia, stability has returned with prices settling in Thailand and Vietnam between $600-$610 pmt. India is still the driver in the region, but with small announcements surfacing of approved G2G deals (Saudi Arabia) an adjusting market, a “business as usual” is returning. In the Western Hemisphere, all prices are now exceeding $700 pmt, with Brazil around $715 pmt, Argentina at $740 pmt, Uruguay at $745-750 pmt, and the U.S. at $755-$765 pmt. The difference here is that the U.S. is the only origin with legitimate supplies until March when the Southern Hemisphere harvest is underway. With prices this firm in the long grain market, it will be interesting to see the medium grain acres planted next year. It’s too early to tell now, but by February when seed is booked and planting decisions are made, we would forecast a drop in medium grain acres and a return to long grain by some degree. The weekly USDA Export Sales report shows net sales of 28,100 MT, 57% down from the previous week and 55% down from the prior 4-week average. Increases primarily for Haiti (15,100 MT, including decreases of 100 MT), Honduras (9,500 MT), Canada (2,000 MT), Belgium (500 MT), and Israel (400 MT), were offset by reductions for Guatemala (400 MT). Exports of 46,300 MT were up noticeably from the previous week, but down 13% from the prior 4-week average. The destinations were primarily to Japan (26,000 MT), Haiti (15,100 MT), Canada (2,100 MT), Mexico (1,900 MT), and Belgium (500 MT).

Market Update: Milling Yields Down, But Pace and Acres Up

Milling yields are the only thing that’s lacking this harvest. We are ahead of pace, up on acres, and up on yields almost across the board, but converting the ample paddy supply to an ample milled product is proving more difficult than anticipated. While this isn’t a huge surprise to anyone because of the excessive heat at key times throughout the growing season, it’s about the only negative we can cite at the moment — which is a net positive! Export prices are competitive with South American origins, and we are largely isolated from any negative impacts of the Indian export bans. In actuality, we are a beneficiary because Iraq took swift action to book milled rice from the U.S., and mills are busy through the end of the year filling that business. Last year all we could report was the doom and gloom of negative food policies foreign governments were taking to combat raging food inflation to the detriment of our U.S. long grain crop. This year represents a new opportunity, in which we will be a featured and stable supplier of long grain rice. Let’s just hope the milling yields improve, as this will be the year we can gain some of our market share back from our drought-stricken South American competitors, namely Brazil. On the ground, prices in Texas are holding at $17.60/cwt, while Louisiana is at $16.50/cwt. Mississippi, Arkansas, and Missouri are in the $15.75/cwt range. The futures market is also firming up a bit, 2%+ increases from Nov '23 thru Jul ’24, with Jul ’24 registering as high as $17.020. Average daily volume jumped 14.86% up to 436, while open interest held steady at 10,839 this week. The USDA crop progress report shows the entire complex at 66% complete, 7% above the 5-year average. Louisiana is leading the charge with 95% complete, followed by Texas at 92%, Mississippi at 90%, Arkansas at 70%, Missouri at 53%, and California at 10%. Arkansas is 1% ahead of last year, and California is 8% behind last year.  In Asia, stability has returned with prices settling in Thailand and Vietnam between $600-$610 pmt. India is still the driver in the region, but with small announcements surfacing of approved G2G deals (Saudi Arabia) an adjusting market, a “business as usual” is returning. In the Western Hemisphere, all prices are now exceeding $700 pmt, with Brazil around $715 pmt, Argentina at $740 pmt, Uruguay at $745-750 pmt, and the U.S. at $755-$765 pmt. The difference here is that the U.S. is the only origin with legitimate supplies until March when the Southern Hemisphere harvest is underway. With prices this firm in the long grain market, it will be interesting to see the medium grain acres planted next year. It’s too early to tell now, but by February when seed is booked and planting decisions are made, we would forecast a drop in medium grain acres and a return to long grain by some degree. The weekly USDA Export Sales report shows net sales of 28,100 MT, 57% down from the previous week and 55% down from the prior 4-week average. Increases primarily for Haiti (15,100 MT, including decreases of 100 MT), Honduras (9,500 MT), Canada (2,000 MT), Belgium (500 MT), and Israel (400 MT), were offset by reductions for Guatemala (400 MT). Exports of 46,300 MT were up noticeably from the previous week, but down 13% from the prior 4-week average. The destinations were primarily to Japan (26,000 MT), Haiti (15,100 MT), Canada (2,100 MT), Mexico (1,900 MT), and Belgium (500 MT).

DHS releases proposed rule for H-2A program

On Wednesday, the Department of Homeland Security (DHS) released a notice of proposed rulemaking to increase oversight of its H-2 temporary visa program, including for workers in the H-2A temporary agricultural program. The proposed rule would allow H-2A workers to switch to employers that do not use E-Verify to check workers' legal status. DHS is accepting comments on the proposal through November 20. This proposal follows last week’s release of a proposal from the Department of Labor on the H-2A program. Interested parties can view the proposed rule here and submit comments here.

House Committee on the Budget advances budget resolution

On Wednesday, the House Committee on the Budget passed a budget resolution for fiscal years 2024-2033, titled “Reverse the Curse” on a 20-14 vote.  The resolution included a policy statement on agriculture, which stated the importance of protecting the farm safety net and curbing the use of the Department of Agriculture’s Commodity Credit Corporation. The full budget resolution can be found here.

Pictured is an important delegation representing the Ecuador rice milling industry led by Juan Pablo Zuniga, President of CORPCOM, the rice milling organization of Ecuador. The importance of rice to the diet of Ecuadoreans cannot be overstated due to a per capita consumption of 100 pounds per year. Since 1997 Ecuador has been self-sufficient and many years produced a surplus of rice; however weather related conditions have changed production efforts like many markets including the United States. Recent imports of milled rice from Uruguay are being used in order to maintain stability with consumption demands. 

The delegation spent the week meeting with farmers, merchants, exporters, FGIS, research, and others in order to gain an understanding of how rice is grown, handled, and marketed in the U.S. The USRPA has maintained a strong relationship with both CORPCOM and Ecuador rice producers since its formation in late 1997 with visits over the years and participation in conferences and meetings in Guayaquil, the main port city on the Pacific coast and the center of the country’s rice production. 

Next week’s Rice Advocate will have more details of the group’s visit from St. Louis through to New Orleans.

Is the story for this marketing year already written for the U.S. long-grain crop? One could argue that it’s all but over before harvest is even finished. Every year has unique features, and this year is punctuated by the Indian ban and the resulting scramble that has gobbled up a bumper crop, and all but made a bearish WASDE report that increased paddy by more than 6 million cwt a mere speed bump in the wake of strong demand. Last year when prices were steady at $680pmt for the back half of last year’s short crop, the expectation was that this year’s large crop would make U.S. long grain more competitive, and prices would drop to converge with South American exporters. However, a strong market in Iraq and Haiti, bolstered by steady domestic business, has firmed prices even further, while South American export prices race upward to converge with U.S. prices — now finding rest at a minimum of $700pmt. We can confirm one sale of Uruguayan milled rice at $760/ton FOB Montevideo destined for Peru. We would contend that the dust is settling from the Indian situation, and we have a steady market moving through the first quarter of 2024 at this juncture. We know that export prices are firm, and cash prices are looking the same. Texas is seeing cash prices of $16.25-$17.61/cwt based on preferred variety and quality of milling yield. Louisiana is looking at $16.50/cwt, while Mississippi, Arkansas, and Missouri are at $15.75. The crop progress report shows steady movement toward completion, with California finally underway in a meaningful way, though still at only 6%. Arkansas is now 15% above the pace for the 5-year average, crossing the halfway point and sitting at 58%. Louisiana and Texas are at 93% and 90% respectively, while Missouri is at 27% and Mississippi is at 74%. The weather is favorable, and much still depends on milling yields to determine just how far this crop will go. Early milling yield reports continue to be very inconsistent, “mostly in the low 50s.” Prices are settling significantly in Asia, where only weeks ago they exceeded $650pmt, but are now reported at $625pmt for Thai rice and $620 for Viet rice. Myanmar and Pakistan are at $635pmt and $580pmt respectively. A recent GAIN report on Vietnam shows rice exports surged to 656,869 tons in August, with the primary markets being the Philippines, Indonesia, Ivory Coast, Ghana, and China. The Philippines jumped 45% from the previous month and accounted for 36% of all of Vietnam’s exports. This surge could be in response to the Thai government encouraging its rice farmers to plant less water-intensive crops as El Nino is impacting the moisture cycles. The weekly Export Sales report registers net sales of 65,800 MT, down 2% from the previous week, but up 24% from the prior 4-week average. Increases were primarily for Mexico (28,100 MT), El Salvador (12,000 MT), Honduras (10,000 MT), Saudi Arabia (8,600 MT), and Israel (4,000 MT). Exports of 21,200 MT were down 73% from the previous week and 58% from the prior 4-week average. The destinations were primarily to Saudi Arabia (8,800 MT), Guatemala (5,500 MT), Mexico (4,900 MT), Canada (1,600 MT), and the Bahamas (100 MT).

Senate hits snag in agriculture appropriations billsOn Thursday, the Senate voted on a bipartisan 91-7 vote to open debate on the Senate floor on the first package of spending bills for fiscal year 2024; however, shortly after the vote, some Republican senators began pushing for the three spending bills to be considered individually, bringing the process to a standstill. This package included three bills including the one for the Department of Agriculture and Food and Drug Administration. The current spending bills expire September 30. Department of Labor proposes new rule for H-2A programThis week, the Department of Labor released a proposed rule to expand employee protections for workers in the H-2A temporary farm worker program. Among the proposed changes are requiring new disclosures on recruitment, making new wage rates applicable sooner, allowing workers to access representation in disciplinary cases, and preventing employers from confiscating workers’ travel documents. The proposed rule has not yet been published in the Federal Register. Once published in the Register, interested parties will have 60 days to comment on the rule. The proposed rule can be found here.

Washington, D.C. Update

Senate hits snag in agriculture appropriations billsOn Thursday, the Senate voted on a bipartisan 91-7 vote to open debate on the Senate floor on the first package of spending bills for fiscal year 2024; however, shortly after the vote, some Republican senators began pushing for the three spending bills to be considered individually, bringing the process to a standstill. This package included three bills including the one for the Department of Agriculture and Food and Drug Administration. The current spending bills expire September 30. Department of Labor proposes new rule for H-2A programThis week, the Department of Labor released a proposed rule to expand employee protections for workers in the H-2A temporary farm worker program. Among the proposed changes are requiring new disclosures on recruitment, making new wage rates applicable sooner, allowing workers to access representation in disciplinary cases, and preventing employers from confiscating workers’ travel documents. The proposed rule has not yet been published in the Federal Register. Once published in the Register, interested parties will have 60 days to comment on the rule. The proposed rule can be found here.

The USDA published a bearish WASDE report this week with the outlook for the U.S. showing an increase of supplies, exports, domestic use, and ending stocks. Carryover was increased 23% from 19.6 million cwt up to 24.1 million cwt. Supplies bumped on account of stocks being raised 5.7 million cwt, and production being raised by 17.3 million cwt. The average yield for this year’s harvest is up, pegged at 7,751 lbs/acre. This is good news, but we need solid milling yields in order to provide a quality product to our customers. The new season average farm price has been moved to $16.80/cwt, down $.90/cwt from last month. Apparently the trade believes the demand side but the supply assessment has some questions as the market has gone up $.77/cwt since the report. Some in the trade feel there may be some double dipping since the new crop harvest was earlier due to the hot weather, meaning new crop contributed to old crop carryover. There is an effort to clarify this point.  The global rice outlook from the WASDE calls for reduced supplies, consumption, trade, and stocks based on detrimental weather patterns and trade policies that are restricting exports. Despite this, global supplies only dropped 4.4 million tons, but the real news is the reduced global trade. This month, the expectation is a reduction to 52.2 million tons, down only 1.5%. Expect to see this number increase as the fullness of the export ban is realized in the coming weeks and months. The September FAO Rice Price update unsurprisingly jumped 9.8% in August, reaching 142.4 points, or 31.4% higher than last year. Prices have not been this high since the 2008 food crisis, which also was predicated by an Indian white rice export ban. But as more news comes out about climate risk, drought, and production problems, the export ban seems to be more of just the first domino to fall. Thailand has suffered poor rains that have impacted rice production, the Philippines have renewed imports after a multi-year hiatus, and several other countries are left scrambling to secure supplies moving into the fourth quarter of the year.

Attracting less attention in the global market, but more important to our locale, is the 10-12% price jump in South America. Recall that earlier in the year, price convergence of U.S. to South American prices was to mean that the U.S. long grain price would fall; global events now declare otherwise. The chart here tells the story and you can see that convergence in the current climate means that Argentina, Brazil, and Uruguay have all shot up to nearly $700 pmt to meet the U.S. export price, which is excellent news as harvest is underway.

Iraq, quickly becoming one of our most important customers, has renewed restrictions on their rice production due to water shortages. Harvested area is expected to be only 20,000 acres; the rest is being imported. The price chaos in India, Thailand, and Vietnam has sent them straight back the U.S., where we are excited to field the business and compete on the world stage again. For a quick glance at harvest, Arkansas has jumped to almost 50% harvested this week, with 71% showing in good to excellent condition. Initial yields are strong, which will help offset disappointments in Louisiana and Texas. Mississippi bumped up to 53% completed from 32% last week, and Missouri is officially underway now over 15% completed. Some of the earliest fields are being harvested in California with mixed results on yields, which can be normal this early. Because of the late planting in California and the relatively cool growing season, the crops are not maturing as fast as normal, and yields are expected to be off. In Asia, prices are settling down now that the panic is subsiding and a “new normal.” Thai prices are reported down to $625pmt, and Viet prices at $620pmt. Pakistan is still sub-$600 at $580pmt.  The export sales report this week shows net sales of 67,200 MT, up noticeably from last week and 58% from the prior 4-week average. Exports of 79,000 MT were up 67% from the previous week and up noticeably from the prior 4-week average.

Senate Agriculture Leadership Urges USDA to Invest in Trade Promotion and Food Assistance

On Wednesday, Senate Agriculture Committee Chairwoman Debbie Stabenow (D-MI) and Ranking Member John Boozman (R-AR) sent Secretary of Agriculture Tom Vilsack a letter encouraging USDA to invest in trade promotion and global food assistance under the Department’s Commodity Credit Corporation (CCC) Charter Act authority. In the letter, the Senators noted the importance of trade promotion programs, which include MAP and FMD, in opening new markets and strengthening presence in existing markets for American producers. They also say the war in Ukraine is affecting supply chains and perpetuating humanitarian crises, elevating the need for increased in-kind food assistance. A copy of the letter can be found here.

Senate Announces Plans to Consider Agriculture Funding Bill

On Wednesday, Senate Appropriations Committee Chair Patty Murray (D-WA) and Vice Chair Susan Collins (R-ME) announced plans to move the first package of fiscal year 2024 appropriations bills to the Senate floor as early as next week. This package will include the funding bills for the Department of Agriculture and the Food and Drug Administration, Military Construction and Veterans Affairs, and the Departments of Transportation and Housing and Urban Development.

OMB Identifies the Farm Bill as Needing to be Extended

The Office of Management and Budget (OMB) sent Congress a list of bills expiring at the September 30 end of the fiscal year in anticipation of the possible consideration by Congress of a continuing resolution. Included in OMB’s list is the extension of the entire 2018 farm bill, which OMB says needs to be extended or included in any continuing resolution unless the current farm bill is extended or a new farm bill is passed before September 30. To date, no new farm bill has been introduced or considered by either the House or Senate Agriculture Committees. For context, in 2018 the House and Senate Committees had both reported their versions of the farm bill, and these bills had passed both the House and Senate by late June. OMB’s full list of expiring authorities can be found here.

EPA and USACE Release Updated WOTUS Rule

The Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers (USACE) issued a final rule to amend the definition of waters of the United States (WOTUS). EPA and USACE were directed to update the WOTUS definition to conform with this spring’s Supreme Court decision on Sackett v. EPA from this spring. The new definition eliminates the “significant nexus” test, which had allowed streams and wetlands adjacent to larger bodies of water to be covered by Clean Water Act regulations. It also clarifies that wetlands must have a continuous surface connection to navigable waters to be protected under the Clean Water Act. The new rule revises the standard EPA and USACE released in January 2023. More information on the new final rule can be found here.

Despite rice producers being in the craziness of harvest, the market is experiencing what could be described as a calm before the storm. Truckers, driers, and farmers are dealing with the constant stress of getting the crop in the barn while the market is in a “wait and see” mode with significant global events swirling in the distance. The industry is well aware of the Indian export ban and red-hot Asian prices, but the direct impact of these food security concerns leaking into the Western Hemisphere is yet to be realized.

A significant reality that has snuck under the radar thus far, though, is that the South American crop is largely sold at this point — leaving the U.S. as the only origin for supplies in the Western Hemisphere for the next six months in a market desperate for available supplies. Mercosur, our largest competition in recent years, is essentially sold out. There are even rumors of Brazil booking a cargo of U.S. rice at the end of this calendar year! It has seemed unfathomable to consider sending rice to Brazil because in recent years of the small crop size to start, but also because Brazil has been the beneficiary of U.S. loss in market share to our core markets. How a year can change the dynamic (or the expected dynamic because nothing has technically happened to us yet in the Western Hemisphere). Things are setting up to be quite exciting. Even now, paddy quoted FOB NOLA at $415 when the price was expected to be $380 at this time. This can certainly be an answer to the higher cost of inputs the war in Ukraine has imposed on producers in the two most recent crop cycles.

With Arkansas now largely underway and reported at 24% harvested, all hopes are hanging on better field and milling yields than what we’re getting out of Texas and Louisiana. The hope was that a large crop and high yields would result in a significant supply of competitively priced rice. Unfortunately, those acres (at least from Texas and Louisiana) aren’t translating into the quality of milled rice the optimists were hoping for, thereby cutting the effective acreage expectations. Louisiana is at 86% harvested and Texas is at 80%. Mississippi is now beyond 30%, while Missouri is only at 5%. Harvesters are just getting in the fields in California for some of the specialty varieties and early-maturing medium grains. 70% of the crop is in good to excellent condition this week, down only 3% from last week. The rice industry will be looking for next week’s USDA WASDE report, scheduled to be released on Tuesday, September 12 at 12:00 pm Eastern Time. In the August WASDE report the 2022-23 carryover was raised a million hundredweights to 16.8 million. The report estimated the carryover for 2023-24 up three million at 19.6 million.

A quick summary of Asia tells us that Thai rice is settling around $650 pmt, with Viet rice very close—maybe closer to $645 pmt. El Niño is creating problems in Thailand, where dry conditions are forcing farmers to plant alternative crops to rice and the government is encouraging them to do so. The United Arab Emirates has suspended rice exports for the next four months, as has Myanmar. Indonesia has announced its desire to increase its buffer stocks but will be difficult to do because so many countries are closing up. Climate risk is becoming a significant factor in food procurement strategies for countries that rely on food imports. Domestic food inflation is a key factor as well. Right now, we see these two phenomena working together in the East and the West to create a tenuous market dynamic that will require creativity, government intervention, and cooperation to overcome.