Rice Harvest Pressure Building on the Marketplace

The rice industry continues to be very slow even with harvest pending as the market has yet to generate any “new” news upon which to move. The export sales report for the week was slightly improved over the previous report by about 1,000 MT but as has been mentioned before, it is not a particularly active time for rice exports at this time of year. Realistically, the export numbers are unlikely to pick up significantly until the middle of September. Vessel loadings were also somewhat improved on a relative scale but remain low for the same reasons as sales. Trade considerations also play a factor and until some resolution is reached regarding some of the major export markets, even the “high season” volumes will likely be suppressed.

Asian pricing has seen some modest recovery in values since the last report with benchmarked origins posting some gains in all areas. A significant portion of the fluctuations are likely attributed to currency movement while the remainder is a result of market forces. There are no major price shifts apparent at this time. The world market price estimate from USDA also saw some decrease over the week although the adjustment also reflects the new marketing year that began on August 1.

In the domestic cash markets, there has been virtually no move in the past several weeks. The reasons for this are multi-fold. Cash rice in producer hands is non-existent and this situation will persist until harvest is well underway in the next few weeks. Also, processors made large purchases earlier in the year that are still being worked against as inventory and thus buyers have no real incentive to become aggressive with the market. Finally, with exports lagging and the myriad of trade issues to be resolved, the offshore demand required for major market changes is not available at this time. Until at least two of these factors are resolved then the current market situation will remain.

The futures market had a lackluster week as well with all of the open contracts on the board posting losses in excess of 3%. The harvest pressure on the market is definitely building up and may well remain for the next several weeks as the market finds the new normal. Until then, it will be a waiting game.

Farm Bill Update

The naming of Senate farm bill conferees was left undone this week.  Negotiations over numbers and naming of conferees, in addition to farm policy issues not contained in the current farm bills under consideration, were rumored to be in active discussions.  The Senate left Thursday with these issues unresolved but will return next week.  There is general optimism that the Senate will be able to approve a motion to proceed and name conferees next week.

In the meantime, the four farm bill principals, Pat Roberts R-KS, Debbie Stabenow D-MI, Mike Conaway, and Collin Peterson D-MN, met on Thursday to begin informal discussions on the farm bill.  Afterwards, they issued a joint statement: “We look forward to working together to get a Farm Bill finished as quickly as possible, and we’re committed to finding solutions to resolve the differences. We must keep working to provide American farmers and families with the certainty and predictability they need and deserve.”

Remember Your Grandfather’s Rice Market?

2018 will be a year to remember.  In the rice market we have always said there are no two years alike and certainly there are specific years when something special happened that make them stand out.  The first one that comes to mind is 2008 when the market thought the world was running out of food and prices of rough rice reached $600/ton FOB New Orleans.  From that point forward, we heard the term “food security” and every country around the world developed a food security program as a result.

However, 2018 is something completely different, something unexpected.  This is certainly not your grandfather’s market.  Times have changed.  Developing countries are more developed than before and are producing grains, including rice at record levels due to increased technology and government programs in some markets.

The announcement this week by the White House of emergency aid for farmers to the tune of $12 billion as a result of the administration’s commercial trade wars is of serious concern to farmers.  Their livelihoods are at stake.  This trade war and related threats are hurting U.S. exports.  U.S. rice shipments to Mexico are being displaced by a duty-free quota of 150,000 tons from Southeast Asia and Mercosur are being used and there is talk of increasing that volume.  The announced emergency aid package for farmers is merely a band-aid on a stab wound in the chest.  Farmers do not want government payments but prefer to have open and free markets where they are on a level playing field with their competition.

U.S. farmers do a very good job when they work in a fair marketplace.  If this trade war continues then there will be farmers going out of business and will take years to recuperate.  Now where is that book grandfather used to read to me called “It Could Be Worse”?

USDA Announces $12 Billion Trade Assistance Plan

This week U.S. Secretary of Agriculture Sonny Perdue announced a $12 billion plan to support farmers hurt by retaliatory tariffs imposed by U.S. trading partners.  In acknowledgment of the disproportionate effect on U.S. farmers of trade retaliation, President Trump directed Secretary Perdue to implement a plan to protect U.S. farmers and agricultural interests. USDA’s trade assistance package will help offset the roughly $11 billion in negative effects suffered by U.S. agricultural producers.

“This is a short-term solution to allow President Trump time to work on long-term trade deals to benefit agriculture and the entire U.S. economy,” Secretary Perdue said.

In announcing the trade assistance package, USDA Secretary Sonny Perdue stated, “USDA will not stand by while our hard-working agricultural producers bear the brunt of unfriendly tariffs enacted by foreign nations. The programs we are announcing today help ensure our nation’s agriculture continues to feed the world and innovate to meet the demand.”.

Recent U.S. decisions to impose tariffs on steel and aluminum in addition to other imports from China have provoked retaliation in the form of countermeasures by China, the European Union, Mexico, and Canada on thousands of U.S. exports, including corn, rice, soybeans, sorghum, cotton, fruits, nuts, wine, wood, cheese, and pork.

In providing this aid to farmers negatively impacted by tariffs, USDA is exercising its authority under the Commodity Credit Corporation Charter Act. USDA will provide aid via three programs:

  1. Market Facilitation Program: This program will provide payments directly to the farmers who have been the most affected. Producers of soybeans, sorghum, cotton, wheat, corn, dairy, and hogs will receive direct payments associated with the 2018 production year.
  2. Food Purchase and Distribution Program: USDA’s Agriculture Marketing Service will purchase any unexpected surplus of affected commodities such as fruits, nuts, legumes, beef, pork, and milk. The purchasing process is expected to continue over several months.
  3. Trade Promotion Program: USDA plans to implement a new trade promotion program similar to the existing Market Assistance Program and Foreign Market Development Program. The program will work to enhance current export markets and develop new ones through trade shows, promotions, and by alleviating regulations and other barriers. Unlike the other two programs, this program will be open to all agriculture commodities.

While Congressional approval is not required to implement the trade assistance package, specific details will be subject to a formal administrative rulemaking process. There is still a lot that is not known about the plan. USDA has not disclosed the amount of payments, although officials mention payments will be based on production. Other determinants for assistance remain unclear.  USDA officials expect to announce more details around Labor Day.

USDA dismissed concerns that the new trade assistance package violates WTO commitments with regard to trade-distorting subsidies. When the U.S. joined the WTO, negotiators agreed to cap trade-distorting domestic subsidies at $19.1 billion annually. USDA says that even with the new assistance, U.S. subsidies remain well below that cap.

Texas House of Reps Hears HCR 33

Dwight Roberts, President & CEO of the US Rice Producers Association and in representation of its charter member, the Texas Rice Council, gave testimony earlier this week at a public hearing at the State Capitol on Texas House Concurrent Resolution 33 calling on the U.S. Congress to end the Cuba embargo. The resolution is an initiative of Rep. Rafael Anchia (District 103-Dallas), chair of the Committee on International Trade & Intergovernmental Affairs for the Texas House of Representatives.  Mark Keough (District 15-The Woodlands) serves as vice-chair.  

 

Dwight talked about why normal trade with Cuba is long overdue for agriculture, trade and as good policy with a neighboring country.  Afterwards Dwight made comments on Texas House Resolution 408 that urges the U.S. Congress to preserve the North American Free Trade Agreement that has come under debate in Washington, DC.

Texas Upcoming Events

[vc_row][vc_column][special_heading title="Western Rice Belt Conference and Texas Rice Council Annual Meeting" subtitle="January 18, 2017 - El Campo Civic Center, El Campo Texas" separator="bottom"][vc_column_text]The annual Western Rice Belt Production Conference will be held on Wednesday, January 18, 2017 at the El Campo Civic Center. Registration for the conference will begin at 8:00 a.m., with the remainder of the program to begin at 8:15 a.m. After a catered lunch, provided by area agribusiness sponsors, the program will conclude at 2:30 p.m.

This joint effort of our Western Rice Belt planning committee, The Texas A&M AgriLife Extension Service, U.S. Rice Producers Association, and Texas A&M AgriLife Research will offer growers and others the opportunity to hear presentations from the top Extension and Research scientists from Texas as well as respected individuals from the rice industry. Topics and speakers will include: Association updates from U.S. Rice Producers and USA Rice; Price Risk Management Tools, Dennis Delaughter; Rice Market Inventory and Outlook, Thomas Wynn; Rice Disease Management Update, Dr. Shane Zhou; Weed Management Update, Dr. Muthu Bagavathiannan; Insect Management in Rice, Dr. Mo Way; Pesticide Laws and Regs Update, Greg Baker; Financial Risk Management, Silveus Financial; and a Rice Policy Update from Dr. Joe Outlaw. The Texas Rice Council will also conduct their Annual Meeting in conjunction with the 2017 Western Rice Belt Conference. The Texas Rice Council will conduct their producer elections during the lunch hour, following the announcement of the Rice Poster Contest.

For more information, contact the Texas AgriLife Extension office in Matagorda County at 979-245-4100; or Colorado County at 979-732-2082; or Wharton County at 979-532-3310; or go to http://wharton.agrilife.org and click on Events to view a flyer for the Rice Conference. 2 1Ž2 CEU’s (1 L&R and 1 1Ž2 IPM) for TDA Pesticide Applicators will be awarded at this event. CCA hours have been applied for and will be offered pending approval. Pesticide Applicators are reminded to provide their Pesticide Applicator License number at registration.[/vc_column_text][vc_single_image image="1482" alignment="center" onclick="img_link_large"][/vc_column][/vc_row]