The USDA reported earlier this week that Texas was 68% headed, which is a little behind schedule. Still, some growers are already tuning up and even running their harvesters. Rice headed is on pace with historical averages for Louisiana, Missouri, and Mississippi, but it’s considerably off in Arkansas where only 19% of the crop has headed. Conversely, in California the early planted rice crop is already 40% headed compared to the norm of 24% for this point and time.

While it is too early into the harvest along the Gulf Coast, first reports are indicating good yields of 42 to 63 barrels per acre. Quality is unknown but what few samples have been graded have resulted in a 55% or better milling yield.  No one in any area of the rice growing region has escaped weather and water problems. Bottom line is until this crop is cut, dried, and stored, the real impact on the market is unknown.

The Iraqi sale reported a couple of weeks ago continues to be a dominate factor in the long grain industry. At first, many thought it would be filled with old crop; however, that thought seems to have shifted as most claim it will be new crop now. This may not be fully ironed out for a couple more weeks. It is understood that half the 40,000 MT sale will be serviced by the larger Arkansas rice mills while the other half will be milled, bagged, and delivered to the shipyard via smaller mills. 

While the U.S. milled rice business to Iraq reportedly out of Arkansas is certainly good news, the announcement of rough rice sales of new crop out of southwest Louisiana and east Texas totaling 50,000 tons by the South Louisiana Rail Facility is welcome news for the region’s farmers. Removing early harvest storage pressure supports local price.

Approximately 92% of the U.S. rice crop is within an area experiencing drought. This is less than ideal for an origin that is already battling high prices. Between inflated input costs, drought, and a strong U.S. Dollar, U.S. rice export prices have become dislocated from the rest of the world. In addition to higher production costs, the industry will also face higher trucking, drying, and storing costs. Natural gas prices ebbed lower last month only to rebound on pipeline maintenance and turmoil in Ukraine this month.

As a result of these hurdles, Uruguay’s market share in Mexico has risen from 5% in 2020 to 15% in 2022; in Costa Rica, Uruguay is on pace to capture 22% of the market in 2022. Brazil also remains a threat to traditional U.S. markets which is perhaps best seen in Mexico as well, where 54,000 MT of milled rice has already been sold during this calendar year. To the disappointment of Central American rice millers and U.S. paddy exporters, the amount of milled rice imports are surging in these markets. This is exactly what the USRPA was concerned of when CAFTA-DR approached its maturity in a market where the U.S. once had 99% marketshare. Unfortunately the entire U.S. rice industry did not agree. When Brazil’s milled rice prices are being quoted around $570 FOB versus U.S. long grain at $710, it’s not difficult to see why this pattern is forming. 

Meanwhile, Asian rice may not be far off from moving west with India 5% brokens trading at $355 FOB. Thailand, currently the most expensive origin in the Far East, is only quoting Thai 5% at $400 FOB. The ongoing container and shipping debacle which was truly exacerbated by COVID-19 in early 2020 has yet to be fleshed out. While this has certainly impeded U.S. rice exports, it has also worked to prevent the infiltration of Asian rice into western markets. 

The futures market, as expected, edged higher again this week, touching a nearby high of $17.19 per cwt. Although the market gave back some of its gains, it still ended the week well.

Last week, USRPA visited with Congressional offices alongside other members of the U.S. Agriculture Coalition for Cuba (USACC). USACC scheduled and arranged meetings with House and Senate staff to discuss the positive impact that opening the Cuban market would have on Domestic producers. USRPA joined representatives from the American Soybean Association, CoBank, the International Dairy Foods Association, the National Association of Beverage Importers, the National Association of Wheat Growers, the U.S. Dairy Export Council, and the USA Rice Federation to discuss potential legislation to reduce trade barriers with Cuba and consider strategy for future legislation. Currently, Cuba imports $250 million of rice each year, primarily from Vietnam and Brazil.

On July 27, Senate Majority Leader Chuck Schumer announced an agreement with Sen. Joe Manchin on H. R. 5376 “Inflation Reduction Act of 2022”. The bill is associated with President Biden’s “Build Back Better” reconciliation framework. The bill would provide $369 billion in climate-related provisions, including $1 billion for conservation technical assistance and $300 million to USDA's Natural Resources Conservation Service to measure the impact of agricultural practices on greenhouse gas emissions. It also included $19.9 billion for Title II Farm Bill programs: Environmental Quality Incentives Program, Regional Conservation Partnership Program, Conservation Stewardship Program, and Agricultural Conservation Easement Program. Additionally, the bill would provide $500 million for biofuel infrastructure, fund the Rural Energy for America Program and rural electric co-ops, provide $9.7 billion for electric co-ops to use for carbon-capture projects, extend the tax credit for biodiesel through 2024, and creates a new "clean fuels" tax credit for low-carbon biofuels. Cut from deal was a provision that would have provided payments of $25 an acre to farmers that plant cover crops through the Environmental Quality Incentives Program. The bill can be found here.

On July 28, the Senate Committee on Finance convened a hearing to consider the nomination of Douglas J. McKalip to be Chief Agricultural Negotiator, with the rank of Ambassador, at the Office of the United States Trade Representative. Senators from both parties voiced approval of Mr. McKalip and agreed that U.S. trade policy must focus on increasing market access and enforcing trade agreements already in place. Democrats voiced approval of the Biden Administration’s overall trade policy and efforts to open new market. Republicans criticized the Administration on its overall handling of trade agreements and frameworks as well as the timeline of President Biden’s nomination of Mr. McKalip. Other issues discussed included enforcement of USMCA for Mexico and Canada, enforcement of the Indo-Pacific Economic Framework, and the impact of agricultural imports on domestic farmers and producers. 

This week, the Senate released its appropriations bills for fiscal year 2023. Total funding across these bills was $1.7 trillion, including $27.02 billion in discretionary funding for USDA and the Food and Drug Administration, $2.3 billion more than what was enacted for fiscal year 2022. The House passed a six-bill package containing the agriculture appropriations bill earlier this month. The Senate bill can be found here.

by Raul Caballero, USRPA Representative in Mexico

Greetings from Mexico! Did you know?

According to the Mexican Department of Agriculture’s 2017-2030 National Agricultural Plan, rice is considered as one of the most important basic foods in the Sustainable Rural Development Law, due to its relevance in the Mexican diet, with a per capita consumption estimated at 8.8 kilos per year. It is the second crop representing the highest food money expenditure for Mexican families. In the same report, it was estimated that consumption will increase 16.5%, passing from 1.17 million MT in 2017 to 1.37 million MT per year by 2030. Production is expected to increase 12.55%, passing from 250,000 MT in 2017 to 290,000 MT in 2030.

In the beginning of 2022, rice from countries outside the USMCA (United States-Mexico-Canada Agreement) were subject to duties of up to 28%. However, in the first week of May, Mexican President AMLO announced several measures to lower the cost of food and agricultural inputs and to produce more basic grains this Spring-Summer season, after inflation reached its highest since 2001 at 7.72% in the first half of April, and the price of the basic food basket increased 29%. The plan includes:

• Temporary import duties exemption of basic grains for one year (May 2022 – May 2023), from countries outside the USMCA, including corn, dry beans, rice, milk and other basic food and raw materials including corn flour, wheat flour, white corn, sorghum and wheat. Other duties of agricultural inputs will also be temporarily suspended, such as fertilizers, including the ammonium sulfate compensatory duties. Duties exempted, will range, for example, from 10% to 45% for beans outside USMCA, and 75% for pork meat, accumulating close to US$8 billion in exemptions.

• Basic food price negotiations with retailers, grocers, and wholesalers, who committed to not increase prices of 24 basic products for the next six months, despite the increased inflation. These products include: dry beans, rice, white eggs, corn tortillas, milk, canola oil, sugar, canned tuna, canned sardines, beef, pork chops, whole chicken, onions, jalapeno peppers, tomatoes, potatoes, carrots, lime, apples, oranges, pasta for soup, boxed bread, and toilet paper. Some of the retailers in the program are: Walmart, Soriana, Chedraui, Casa Ley, LaComer, Marza, Super del Norte and H-E-B. Wholesalers include: Ragasa, Schettino Hermanos, and Grupo Porres. Food Processors include: La Moderna, SuKarne, Pilgrims, Bachoco, Lala, Alpura, Maseca, Bimbo, and Kimberly-Clark.

Although the cash market remains in the doldrums, that may soon change with the notable export activity that finally materialized. It was reported that Iraq recently purchased 40,000 MT of U.S. rice, or one vessel. Considering the shipping date is imminent, it will most likely aid old crop prices, and have little effect on new crop. For now, long grain paddy prices range from $16-17 per cwt depending on the location.  Southern medium grain, when available, is trading between $19.50-20.50 per cwt.

The first fields of rice have been cut in Texas and south Louisiana as some farmers have struggled with water issues over the past two months due to the strong drought and intense heat. There are reports of some fields being abandoned in Texas as farmers have not been able to keep water on the crop in some areas due to the intense evaporation and individual well situations. Where water isn’t an issue, high field yields are expected.

There is plenty of border and internal Mercosur trade taking place, as per the usual. However, the powerful rice exporting region has also made strong headway in other markets as well. For example, roughly 135,000 MT (paddy equivalent) has traded to Mexico from Brazil. Other notable destinations for Brazil that overlap with US rice are Peru at 68,000 MT, Costa Rica at 40,800, and Venezuela at 130,000 (all paddy basis). Furthermore, these are just the sales reported since January. While some of this business was actually paddy exports other portions were milled rice sales; when U.S. 5% long grain is being quoted at $710 FOB compared to Brazil where quotes were recently $575, it’s not difficult to understand how the US rice market is being undermined by South America. Brazil’s prices are the highest export prices in Mercosur, but that’s also because of the logistics required to bring the rice to ocean ports. 

Based on the most recent USDA export sales report, it appears that U.S. long grain rice is struggling to maintain its footing in the Mexico market. Export demand to this destination is down 22% YTD or 174,000 MT. Fortunately for the industry, some of this market loss has been offset by improved demand in Colombia and Guatemala. Overall, paddy export demand is sluggish against last year, but milled rice demand is up 25% YTD on increased shipments to Haiti and Colombia.

In Thailand, the ongoing harvest has alleviated some pressure in the market, allowing export prices to soften. In addition to fresh supplies, export demand has benefitted from a weakening Baht, down 11% since January. Iraq, the largest benefactor of these fundamentals has now purchased upwards of 600,000 MT since December from this origin. India remains the cheapest option for long grain rice in the world market, despite a lagging monsoon season. Some traders speculate that exports may see a slight downturn if the monsoon conditions don’t drastically improve in the last half of the rainy season. 

The futures market was up against last week as every contract climbed at least $0.60 per cwt. Since Monday, the trading volumes have shot upward, and open interest is also climbing. This leads some to believe that the recent rally may find support and even continue. 

House Passes First FY 2023 Minibus Appropriations Package

This week, the House approved a six-bill minibus appropriations package on a 220 to 207 vote. The package includes the FY 2023 Transportation and Housing and Urban Development, and Related Agencies; Agriculture, Rural Development, Food and Drug Administration, and Related Agencies; Energy and Water Development, and Related Agencies; Financial Services and General Government; Interior, Environment, and Related Agencies; and Military Construction, Veterans Affairs, and Related Agencies funding bills.

Several amendments were adopted on the floor. A division-by-division summary can be found here. The text of the Rules Committee Print can be found here. A list of adopted amendments can be found here. The Rule for H.R. 8294, with a list of all amendments and a description provided by the sponsor, can be found here. 

The Senate is expected to release their FY 2023 appropriations bills sometime next week.

House Holds Hearing on H2-A and H-2B

This week, the House Committee on Education and Labor Subcommittee on Workforce Protections convened a hearing to review and assess the impact H2 Visa Programs (H-2A and H-2B) have on workers.

Members and witnesses raised concerns about H-2A employers are discriminating against American farm workers and the lack of protection from extortion and workforce abuse endured by workers. Members highlighted the need for the same labor protections afforded to workers in other industries.

Members also criticized the Biden Administration’s immigration policy and handling of the southern border and said that Congress cannot meaningfully discuss reforming the H2 Programs until the border is secure and under control. Witnesses noted that employers participating in the H2 Programs who comply with the many regulations, and are subject to oversight from DOL, are frustrated that other employers are hiring undocumented workers with virtually no governmental involvement. It was also stated that from the worker perspective, workers participating in the programs to legally enter the U.S. are being deterred from doing so due to the high number of migrants crossing the border illegally that still receive similar jobs to those received by H2 participants.

Witnesses encouraged Congress to pass the Farm Workforce Modernization Act which they stated would give opportunities for farm workers to work in the U.S. with a path to permanent residency. Additionally, witnesses advocated for the passage of the Fairness for Farm Workers Act which they said would protect farm workers and afford them the same rights as workers in other industries. 

ITC Rejects Fertilizer Tariff

This week, the U.S. International Trade Commission voted to reject antidumping and countervailing duties on imports of fertilizer from Trinidad and Tobago and Russia. The vote may help ease price increases and shortages in the U.S.

USRPA staff members Mollie Buckler and Grace Wang attended the U.S. Agricultural Export Development Council (USAEDC) Seminar in Washington last week, the organization's first in-person event since the pandemic began. The meeting included one-on-one consultations with ATOs from Morocco, Guatemala, Panama, Colombia, and the Caribbean, focusing on key trade issues and market development activities that are currently underway for the promotion of U.S. rice.  

The second day began with a general session, including remarks from Foreign Agricultural Service Administrator Daniel Whitley, whose presentation included a shoutout to USRPA as he discussed cooperator engagement. USRPA works closely with USDA/FAS offices both domestically and abroad, and maintains open communication to make sure farmers interests and priorities are appropriately addressed. The seminar concluded with breakout sessions that focused on the ever changing landscape of the global commodity trading.

No one is more aware of the grain quality debate going on within the U.S. rice industry than Nutrien Ag’s Dyna-Gro rice breeding program. That was evident during yesterday’s field day at their rice research station located south of El Campo, Texas. Field day participants were given a history of the breeding program. While there are over 3,000 yield plots at the station, there are 4,000+ plots stretching from South Louisiana all the way to Tanner Seed Farms in Missouri. Ongoing activity in Puerto Rico, Nutrien’s molecular lab in Canada, key university researchers and rice farmers themselves, the ongoing program operates 12 months a year in continuous breeding projects. 

While the DG263L conventional variety released last year was a major step forward, it is part of a building block for the future. DGL2065 is being developed as a competitor for Presidio and Cheniere due to its high field yield and excellent ratoon characteristics along with an intermediate amylose and gel temperature. Milling is equal to or better than CL153 in tests. Dyna-Gro is currently evaluating 20 conventional hybrids with consistent yields, grain quality and improved agronomic traits. 

“These are very encouraging developments and creates positive news for rice buyers, in particular in the foreign marketplace that is vital to our farmers," Dwight Roberts, advisor to the USRPA who attended the event. "I am confident that the US rice is in the process of restoring its reputation for quality while raising profits for farmers.”

Learn more at www.nutrien.com.

In virtually every rice growing state, the cash market continues to be stagnant, similar to the nearby futures contract which has basically traded sideways since the beginning of the month.

Based on the USDA crop progress report, the crop is in generally lower condition than last year. Currently 75% of Arkansas’ rice is in either good or excellent condition compared to the 88% at this time last year. As for rice headed, the two crop years are on parity with each other. Along the gulf coast of Texas and Louisiana a number of farmers began draining fields a few days ago and unless someone isn’t already cutting this week, then next week for sure, assuming the weather continues dry.

Globally, all eyes are still on Asia where rice demand is believed to be stronger due to the Russian & Ukraine wheat fallout. As the Middle East and North African markets hunt for alternative calories, rice is expected to become one of the key substitutes in this normally heavy wheat consuming region. Another factor that can place strain on the world rice market pertains to the fertilizer issue. Growers in Asia were clearly forced to ration fertilizer on higher prices, but the effects of those agronomical decisions have yet to be seen. China is already reporting increased pest and disease problems with its rice crop and Thailand anticipates lower yields due to the inflated fertilizer and chemical costs. Since the Russia invasion, rice prices have remained rather stable when compared to wheat and corn. However, the last time the grain trade was this disrupted was in 2008, when rice prices ran past $1000 per ton, nearly twice the current value. 

For the past year, India has sustained the lowest long grain export prices in all of Asia; according to the USDA Grain: World Markets and Trade report that may change in the months ahead as India, along with Pakistan and Cambodia brace for increased demand. The high domestic prices in Vietnam are pushing traders to source more and more rice each week from India, which should eventually strengthen India’s prices. Pakistan, a large wheat producer and consumer, has been afflicted by hot and dry conditions which will ultimately lead to lower output for both rice and wheat. The European Union is also grappling with severe drought which will force the region to boost imports in 2022/23. Overall, global rice stocks are set to decline in 2022/23 while the global rice trade is forecast to expand. 

Arkansas - A Visit with PJ Haynie, Arkansas River Rice

Last week in Arkansas, USRPA Advisor Dwight Roberts enjoyed a visit with PJ Haynie, Chief Executive Officer for Arkansas River Rice, a rice mill located near Pine Bluff. PJ also farms rice, soybeans, and corn just west of the town of Marvell, Arkansas. A graduate of Virginia Tech, PJ is a fifth-generation farmer, growing up in northern Virginia where Haynie Farms owns and operates a transportation company that specializes in food grade logistics in addition to farming corn, wheat, soybeans, and canola. PJ currently serves as the Chairman of the National Black Growers Council. PJ and his wife Dr. Lisa Haynie reside in Reedville, VA with their three children. Visit www.arkansasriverrice.com to learn more.

Guatemala - U.S. Embassy Celebrates 4th of July with Jambalaya

The U.S. Embassy hosted an Independence Day reception at its new state-of-the-art facility in Cayala last week. USRPA and ARROZGUA participated in the event, which included a giant pot of jambalaya made with U.S. rice. Above, U.S. Ambassador William W. Popp pauses for a photo op with some of our Guatemalan representatives. 

Texas - Texas A&M AgriLife Research Center Rice Field Day

On Thursday, Texas A&M AgriLife Research Center held its 74th Annual Rice Field Day in Beaumont. In addition to updates from researchers including Dr. Lee Tarpley (pictured above), USRPA President & CEO Marcela Garcia gave remarks to the group.