Market Update: Weather Trends Influence Markets, Uncertainty for 2024

This week, the U.S. rice market continued to churn through its steady domestic business and work on the problem of the low draft of the Mississippi River. This continues to affect most aspects of the agricultural trade but is putting a particular damper on total exports because products simply can’t move down the river at the anticipated rate. Haiti and Iraq are the two primary destinations for milled rice at the moment, and it will be nice to be able to fill a barge to the brim once again after the appropriate rainfall. As of this writing the river continues to hamper some barge loading positions while the majority are operating fine. Cape Girardeau, Missouri is the barge site furthermost north used for rice.
Directly south of us in the Western Hemisphere, Brazil and Argentina are making waves. First in the international spotlight is the new Argentine President, Javier Milei, who is determined to make the U.S. Dollar the currency of Argentina. He is not taking a surgical approach, but more of a blunt-force one. While his ultimate goal is to bring stability to the wildly volatile Argentine economy, he is wreaking short-term havoc on government departments, officials, and public works. Brazil’s news is more isolated to the rice industry, and their reported shortage leaves no room for speculation. The government has officially recognized the two Thai vessels that have recently been unloaded to bolster short supply. This sends far-reaching implications to export markets that are now available to U.S. exporters, as this cripples Brazil’s ability to compete at previous levels. Harvest in the Southern Hemisphere arrives in March, and it’s important to take advantage of the current window of opportunity. Adverse weather conditions continue to impact the Mercosur crop and many are estimating lower field yields than previously anticipated. Prices remain extremely firm.
The most recent FAO Rice Price Update shows an index that averaged 138.9 points in November, which is the first time it hasn’t moved this year. The stagnation is a good sign for global rice prices but remains at 21.2% over the same time last year. This is the result of the global marketplace finally coming to terms with how to procure rice without India, with Vietnam appearing to be the big winner. The report states that Vietnamese prices have risen to their highest nominal level since July 2008. Japonica and medium grain varieties dropped 2% each this month, with Glutinous prices dropping 6.9%.
In Asia, Viet prices evened out from last week’s $660 pmt price and may be showing signs of tempering. Thai prices simply rose again in an attempt to catch up to Vietnam, with this week’s prices at $655 pmt. We can compare the FAO Rice Price Index growth of 21.2% year over year to Thai prices, which have increased a whopping 44%, and Viet prices which have popped 45%. 
The weekly USDA Export Sales report shows net sales of 121,100 MT this week, down 6% from the previous week and 1% from the prior 4-week average. Increases were primarily for Japan (40,000 MT), Mexico (27,900 MT), Nicaragua (25,000 MT), Canada (8,600 MT), and El Salvador (8,000 MT). Exports of 54,000 MT were down 40% from the previous week and 2% from the prior 4-week average. The destinations were primarily Japan (26,600 MT), Haiti (15,100 MT), Mexico (6,600 MT), Jordan (2,200 MT), and Canada (1,900 MT).

2024 Western Rice Production Conference

USRPA is proud to once again sponsor the annual Western Rice Belt Production Conference at El Campo Civic Center on January 17, 2024. The conference, which includes both a Production Conference for rice producers and industry professionals and a Rice Consumers Seminar for homemakers, will take place in the main auditorium.

To kick off the conference, an early bird session on Feral Hog Abatement will be held in the Myatt Room from 7:00 a.m. to 7:50 a.m. Registration will begin promptly at 7:30 a.m., followed by the main program at 8:15 a.m. The program will pause for a catered lunch, sponsored by local agribusinesses, and the conference is scheduled to conclude at 2:45 p.m.

There is no fee to attend the upcoming Western Rice Belt Conference. However, RSVP is required so that meals can be planned accordingly. For additional information, please contact the Texas AgriLife Extension office in Colorado County at 979-732-2082, in Matagorda County at 979-245-4100, or in Wharton County at 979-532-3310.

Agenda and RSVP

The 27th Annual National Conservation Systems Cotton & Rice Conference is headed to Jonesboro, AR

Producers, mark your calendar for January 30 – January 31, 2024, for what will be the most important conference to attend in 2024 if you want to increase your yields and cut your costs. “This conference has the reputation as being the number one place where all producers can learn the latest production methods and techniques being utilized by the leading ag producers, researchers, and the ag industry in the United States,” said John LaRose, Jr., Conference Steering Committee.
Registration and Hotel Information

USRPA Hosts Millers from El Salvador

Left to Right: Joel Salazar, Board of Directors Secretary for Centroamericana de Mercadeo El Salvador, S.A. de C.V. (CEMERSA); Handal Salazar, Director of Central American Trade CEMERSA; Iris Figueroa - USRPA; Tommy Turner, President Texas Rice Council; Keith Klatt, Location Manager Rice Belt Warehouse; Javier Navas, President ASALBAR (National Rice Organization in El Salvador) and Legal Advisor to the Board Of Director of CEMERSA; Omar Salazar, President CEMERSA; Tony Sanchez, VP of Operations Rice Belt Warehouse.
Organized by the US Rice Producers Association, millers from Centroamericana de Mercadeo El Salvador, S.A. de C.V (CEMERSA) in El Salvador spent three days visiting every aspect of the U.S. rice trade in Texas.
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 group visited Texas farmer sales offices, drying and storage facilities, harvesting, and Hansen-Mueller at the Port of Houston to learn how the Texas Rice Industry identity preserves rice to provide traceability from our fields to their mills for both domestic and international buyers.
Once again, this reverse trade mission shows the relationships the staff of the US Rice Producers Association has with buyers of rice throughout the world. All business starts with good relationships.

CEMERSA representation visiting Rice Belt Warehouse joined by Toni Sanchez and Trinidad Chavez, Rice Belt Warehouse.
Visiting with Chris Brown at Hansen Mueller.

Looking at rice samples with Pam West at Brookshire Drying Co., Inc./Texas Rice Milling Inc.

Meeting with Jay Davis at Coastal Rice and Futures Inc.

Washington, D.C. Update

GAO releases report on decreasing the cost of crop insurance to the federal government

On Saturday, the Government Accountability Office (GAO) issued a report outlining ways USDA can reduce the costs to the federal government for the crop insurance program. It noted that in 2022, the program supported 1.2 million policies covering 493 acres of farmland at $17.3 billion. Of this total amount, $3.7 billion was paid to private companies to administer the program. It noted that between 2011 and 2022, companies received an annual rate of return on retained premiums of 16.8 percent on average (about $1.4 billion in underwriting gains per year), which exceeded a market-based rate of return (10.2 percent). GAO suggested that adjusting the program’s rate of return to more closely reflect market conditions could save the federal government hundreds of millions of dollars per year. In addition, GAO suggested that costs could also be cut by reducing premium subsidies for high-income policyholders. The full report can be found here.

USRPA signs on to a letter on fertilizer prices

On Thursday, USRPA joined other agriculture organizations in calling for the U.S. International Trade Commission (ITC) to consider how tariffs on Moroccan phosphate fertilizer impact domestic producers. ITC was ordered by the U.S. Court of International Trade to reconsider how it determines material injury in a decision issued in September this year. The letter acknowledges the challenges producers have faced due to rising input costs. A copy of the letter can be found here.

Congress releases NDAA conference report

On Wednesday, the House and Senate released the conference report for the fiscal year 2024 National Defense Authorization Act. In the act was a provision to establish an office of counterintelligence within USDA. The House and Senate both passed their respective versions of the bill in July, though neither contained this provision. The two chambers are expected to move quickly towards final passage, hoping to have reached an agreement by the end of next week. The NDAA conference report can be found here; the section on the new office begins on page 2154.

Market Update: U.S. Rice Significantly Available in the Americas

Prices are still firm as the U.S. is the only supplier of viable long grain quantities in the Western Hemisphere at the moment. A strong domestic market, which proved to be the savior last year when export sales were painfully low, continues to be a help in the current market environment. The buyer that is noticeably absent at the moment — but not a cause for concern — is Iraq. Iraq has already procured much of what was expected from the U.S. They are busy making acquisitions in the East, so an entry from Iraq back into the U.S. market would only firm prices further. As it stands, mills are already busy with fulfilling Iraq deliveries, so all is good on that front.
What is not so great for the mills, however, is the overall milling quality of the crop. There have been a lot of reports of below-normal quality this year, ranging from the low 40s up to the mid 50s. Some regions are much better than others, but surveys would suggest that on the whole at this stage in the game, 51-52 is normal. Anything as high as 55 is a blessing to help make up for the sub-50s that are all too common this year.
Prices on the ground remain firm, with adequate volumes transacting in recent weeks. The low levels of the Mississippi River are certainly a drag on logistics but do not seem to be slowing the purchase or acquisition of paddy prices. Prices have not moved significantly off of last week’s levels, with Texas showing $18/cwt, Louisiana at $17.30-$18/cwt, and Mississippi, Arkansas, and Missouri in the $16.75-$17.25/cwt range.
As if the Russia/Ukraine conflict and the Hamas terrorism aren’t enough, Venezuela has thrown its name into the hat of potential conflicts in the Western Hemisphere. This is significant to rice because 37,000 MT of rice was just registered on the Export Sales report this week. Venezuela recently voted in strong favor of reclaiming a portion of Guyana, essentially redrawing a map that is over a century old. The United States has put its weight behind Guyana in the territorial dispute but creates another delicate situation for the U.S. to face on the international stage. There is an additional layer of complexity here because U.S. crude oil imports have begun since January of this year, up to 153,000 b/d as of July, after a halting of imports in 2019 due to political reasons. It is a tricky situation diplomatically, but good for the rice industry to regain an important market.
In Asia, prices keep marching upward, with Viet prices cresting as high as $670 pmt and Thai prices reaching $630 pmt. The big question is how long prices will remain this high, and what will the ultimate impact be of India relaxing its export ban. Very strong demand in the region keeps pressure on prices that are now within $100 pmt of U.S. long grain prices. A very strange phenomenon indeed.
The weekly USDA Export Sales Report shows net sales of 128,400 MT this week, up 73% from the previous week and 29% from the prior 4-week average. Increases were primarily for South Korea (40,000 MT), Venezuela (37,000 MT), Mexico (22,400 MT), the Dominican Republic (14,200 MT), and Japan (7,300 MT). Exports of 90,100 MT were up 90% from the previous week and 60% from the prior 4-week average. The destinations were primarily to Mexico (30,200 MT), Venezuela (21,000 MT), Honduras (15,700 MT), Haiti (14,200 MT), and Jordan (4,500 MT).

RMTC 2024: Sponsor & Exhibitor Opportunities Now Open to the Public

Registration is now open for RMTC 2024!Register at our early bird rate of $600 today.
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RMTC 2024: Sponsor & Exhibitor Opportunities Now Open to the Public

Get your dancing shoes ready and come join the fun!Reach out to us for tickets and sponsorship information.We hope you'll join us for the Texas Rice Roundup on February 10!
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Washington, D.C. Update

USDA opens application process for RAPP funding

This week, USDA opened for applications to its new Regional Agricultural Promotion Program (RAPP). RAPP will finance market development opportunities to increase exports and diversify markets for agricultural producers. It was established in October after the Senate Agriculture Committee leaders sent Agriculture Secretary Tom Vilsack a request to support agricultural producers by investing in trade promotion and food assistance. USDA will make $1.2 billion available over five years; USDA has made $300 million available for 2024. Interested parties can learn more and apply for funding here.

President’s Export Council approves agriculture recommendations

On Wednesday, the President’s Export Council convened for its fall meeting. The President’s Export Council, which is the main national advisory committee on international trade, met to discuss three letters of policy recommendations, including one on agricultural trade. The recommendations in the agriculture letter included increasing collaboration on diversifying the U.S. agricultural supply chain, establishing a robust agricultural trade agenda, enforcing existing trade agreements, and leading on international sustainability and climate efforts. The recommendation letter was adopted by the Council without any objections. A copy of the letter can be found here and a recording of the event can be found here.

Market Update: India Export Ban Hovers Over World Market

With Thanksgiving in the rearview and the heart of the holiday season ahead, we set our sights on a market that continues to be firm despite a few challenges. It was our hope that this report would include good news of significant rains in the northern parts of the Mississippi River and its surrounding watersheds, but unfortunately the low draft continues to be a problem for rice and all commodities. Export growth and sales continue to be stifled by this problem that isn’t “supposed” to happen. 
Looking at the quality of the crop, low head rice remains a challenge, where high 40’s and low 50’s are the norm in some regions. In the Delta, the overall averages could be pegged at 53/70, while other regions are having a difficult time recalling when the head rice has been this challenging. There have been a few paddy vessels that have been sent south out of the Louisiana Rail Facility with an average head of 55, which we expect will make our partners in Central America happy. Right now, FOB paddy is quoted at approximately $425 pmt. On the ground, the spot market in Texas indicates an $18/cwt price, Louisiana $17.28-$18/cwt, while Mississippi, Arkansas, and Missouri are all in the $16.75-$17.25/cwt range.
Much of the action in the rice market is taking place in the Eastern Hemisphere, where markets continue to ebb and flow to the tides of the Indian export ban. In past editions, we highlighted the precedent-setting spread between Thai and Viet rice that had reached $100 pmt, with Viet prices higher than Thai. It was expected that converging to a more normal spread of $30-$40 pmt was inevitable. However, instead of Viet prices dropping and Thai prices firming to meet in the middle, Thai prices simply rose over $50 pmt to crest $600 pmt once again, while Viet prices held steady at over $650 pmt. It’s truly a strange phenomenon, but can be explained by the huge purchases from Indonesia in their preparation to avoid shortages should the El Niño prove problematic. Steady purchases from the Philippines, West Africa, and other usual locales don't hurt either. Right now, lifting the Indian export ban appears too far off for any buyers to push any purchases, and this results in firm pricing in Asia and in the U.S.
In all of this news about trade in the East, China is noticeably absent from the market chatter. This is in part because of the soured trade and global relations of present, but a recent USDA GAIN Report on the People’s Republic of China offers some keen insight to the stocks there. While information on rice stocks in the Minimum Support Price program is not publicly available, sources peg the best guess in excess of 40 MMT. Two MMT are 2015 and 2016 crop, 14 MMT are 2018, 16 MMT are 2019, and 12 MMT are 2021 crop. Rice experts at Post are indicating that China is focusing on technology and production with the intent to export in order to increase its “circle of friends” through its Belt and Road initiative. China’s imports have actually decreased by over 2 MMT as a result of the Indian export ban, so there is an argument to make that they will scoop up a significant amount of India’s stock once the export ban is lifted, likely sometime in late Q1 of 2024.
The weekly USDA Export Sales report shows net sales of 74,200 MT this week, down 7% from the previous week and 29% from the prior 4-week average. Exports of 47,400 MT were down 11% from the previous week and 8% from the prior 4-week average.