The rice industry continues to move along with even more news to digest since the last report. The weekly export sales report indicated another boost in net sales nearing a total of 58,000 MT for the week. This number remains far from optimal but is still enough to be considered healthy for the industry. Additional sales to Iraq or even a few thousand metric tons to Central or South America would be highly welcomed at this time in an effort to alleviate the current glut of rice in the marketplace. Vessel loadings were notably higher than last week with volumes nearing 95,000 MT. Some of this is reflective of the recent high-volume sales but the remainder is an indication that old sales on the books are beginning to be filled. Both of these scenarios are positive for the near-term market outlook.
In Asian markets, the benchmark origins were mostly sideways over the week with some price weakening in key areas. The magnitude and direction of the changes seem to suggest that changing currency valuations had the lion’s share of the action as opposed to true supply and demand fundamentals.
USDA released its world market price this week and ultimately lowered the indicator for both long and medium/short grain classes of rice. This comes as a minor surprise, but optimism remains for an upward adjustment to occur in the coming weeks. The futures market had a rollercoaster ride over the week after last week’s massive gains. The trading action started out bullish with a continued rally, but the interest rate increase on Wednesday sent the financial markets into freefall and ultimately dampened the momentum in the rice market. Thursday’s WASDE report was more neutral to bullish than anything else, but the futures contracts had a different take and the resulting decrease brought the open contracts on the board back into negative territory for the week.
The domestic cash markets continue to soften as harvest pressure from the Upper Delta weighs into the equation and has the expected effect of suppressing prices down river. Along the Gulf Coast, storage is still an issue (especially in Texas) which is having a similar impact in those areas. The harvest in Mississippi is in the final throes while Arkansas and Missouri report well over two thirds of the rice having been harvested at this time. Quality reports indicate lower milling yields in those areas than was hoped for.
In other news this week, the UDSA released its monthly World Agricultural Supply and Demand Estimate (WASDE) with no significant surprises. The revisions for this month were exclusively on the supply side of the equation and consisted primarily of a decrease in average yield by 24 pounds per acre. This decrease led to a downward revision in the overall supply number by 700,000 hundredweights. With no demand side revisions (the Iraqi sales having seemingly been already incorporated into the estimate) the ending stocks estimate was adjusted accordingly by 700,000 hundredweights with no impact on the season average farm price projection.

Things have become more lively in the rice industry over the week as more information becomes available and the market factors appear to be more favorable to movement. The export sales report for the week reported low volume for the current installment, a roughly 70% decrease over the volume of the previous report. Of note is the sale to Iraq that should show up on the next week’s report of a much needed 90,000 MT. This sale, while much anticipated, will help to alleviate some of the pressure on the industry resulting from a large 2018 crop. Vessel tonnage was up from the previous report, and as a percentage increase looks to be very positive. From a tonnage perspective, the increases were marginal but as additional sales show up to be shipped, in addition to the volume already on the books, this figure should be stronger in the weeks to come.

Asian pricing generally appreciated over the week for the benchmark origins. Most, if not all, of the changes, were due to currency valuation changes but the firmness at current levels indicates that there is some stability at this time. The USDA World Market Price estimate for the week saw increases for both long and medium/short grain classes. Given the general direction of the market over the past weeks, this adjustment was somewhat predictable. Again, given the stability of the market currently, the probability of further significant increases is limited.

In the domestic cash markets, very little has changed in most areas with bids remaining in stagnation due to harvest and storage pressure in the various regions. From a production standpoint, the harvest in the Upper Delta continues to roll in and estimates peg that it is almost three-quarters complete in aggregate. Along the Gulf Coast, unseasonably heavy rainfall has delayed the second crop progress to the point that quality and yield are becoming seriously affected. The futures market has had an extremely good with the advent of positive marketing news. All of the open contracts on the board posted positive gains nearing 9% over last Friday’s close. The reasoning for the positive movement is multifold. The finalizing of the USMCA agreement early in the week set the market off to a positive start and the eleventh-hour sales in the export market went on to further the gains. Next Thursday sees the monthly WASDE report from USDA that will have some market changing impacts. Some expectations in the report include revisions to the projected yield numbers as well as export and stock projections.

The 2014 farm bill will expire on Sunday.  Latest reports indicate that none of the 12 titles of the farm bill have been resolved.  Although Conference leadership expresses their desire to finalize the farm bill in October in order to quickly approve a final agreement in November, without a final deadline imperative there is little possibility of resolution by then.

The main issues remain centered around the commodity, conservation, and nutrition titles, with the nutrition title being the largest obstacle.  Budgetary issues, such as spending offsets needed to provide funding to other areas, complicate all these issue areas.

In the commodity title, a House provision to end payments on unplanted base acres remains a difficult issue.  Consolidation of programs in the conservation title is encountering opposition.  Of course, disagreement over work requirements in SNAP is the most politically charged between Democrats and Republicans.

The expiration of the farm bill will have little impact on the operation of the commodity programs.  There are other programs, lacking a funding baseline, that are affected.  Conference leadership is discussing implementation of these “orphan” programs with USDA in the hope of utilizing discretionary authority to minimize disruption.

Mexico Economy Minister Ildefonso Guajardo is in Washington, D.C. this week to meet with U.S. Trade Representative Robert Lighthizer to continue high-level NAFTA talks. This week the two countries will focus on auto rules of origin and the inclusion of a sunset clause.

Over the past two weeks, the U.S. and Mexico have moved to close an additional ten chapters of the agreement. As they move into the third straight week of negotiations, negotiators will push to update the agreement’s rules of origin for autos and wage requirements. The U.S. has pushed to include tougher rules regarding what percentage of the car needs to be built in NAFTA countries to avoid tariffs. The U.S. has proposed increasing that percentage to 75 percent, from 62.5 percent, as well as requiring that a portion of those autos be made in factories that pay at least $16 per hour.

This week’s meetings will also include discussing a sunset clause. The U.S. has strongly pushed for a provision that would automatically terminate the agreement if all three NAFTA countries do not agree to renew it every five years. Mexico has strongly opposed the idea of a sunset clause in fear that it would hurt investment in Mexico and the global competitiveness of North America.

Negotiators are working to achieve an agreement in principle in time for the current Mexican administration to sign an agreement. President-elect Lopez Obrador takes office in December, and U.S. law requires a strict timeline of congressional notice that would require finalizing negotiations this month if a new agreement is to be approved before end of year.

While recent negotiations show significant progress, several important issues remain unresolved, including seasonal restrictions on agriculture trade. The U.S. has proposed creating a seasonal window for agricultural products that would restrict imports from Canada and Mexico and impose a tariff on products based on volume and the time of year.

While the U.S. has discussed the idea of creating a bilateral NAFTA agreement with Mexico, Mexican officials insist that Canada be part of the final agreement. Canada did not participate in the past two weeks of negotiations on bilateral U.S.-Mexico issues. In the meantime, Canadian trade officials have conducted high-level strategy discussions in preparation for the resumption of trilateral NAFTA negotiations.

Wilmington, Delaware – August 1, 2018

Belchim Crop Protection USA announces today that it will be distributing Tenchu 20SG (active ingredient dinotefuran), a leading insecticide to protect rice crops against rice stink bugs.
Rice stink bug (RSB), the primary cause of pecky rice, was first reported as a pest of rice in the 1880’s. With quality becoming a bigger issue every year, rice stink bug control is critical to producing a profitable crop. Dr. M. O. (Mo) Way, Professor of Entomology at the Texas AgriLife Research and Extension Center, shared his thoughts on the major factors contributing to this problem pest.

“One of the reasons is the grain sorghum grown nearby. When the sorghum is harvested, the stink bugs move into the rice, which is heading about the same time,” said Way. “Another factor is the use of malathion as part of the Boll Weevil Eradication Program possibly killing off some of the beneficials, and a third factor is related to pyrethroids. There are a lot of pyrethroids being sprayed on multiple crops in our area, and we’re seeing problems with them. We used to have maybe four or five to seven days residual, but we’re not seeing that any longer.”

Dinotefuran, the active ingredient in Tenchu, is systemic and shows residual control of 7 to 11 days. The rate of application is 7.5 to 10.5 ounces per acre, which is equal to 0.09375 to 0.131 pounds of active ingredient per acre. With Tenchu, no more than two applications per season are needed and the pre-harvest interval is 7 days.
Learn more about Tenchu here.